Monzo Is Ready To Move Ahead With Its Crypto Plans
The crypto market is lately experiencing a meltdown. However, Monzo is likely to continue with its cryptocurrency investment plans. As per what its co-founder said recently, Monzo is not planning to back away from its previous decision to invest in crypto assets.
But, before we dive deep into it, let’s learn a little about Monzo and the recent turmoil in the crypto market.
What is Monzo bank?
A number of “challenger” banks have emerged in recent years. These banks majorly focus on convenience and technology. No doubt it is bringing significant changes to the banking industry. And Monzo is among the most well-known members of this new breed.
Initially known as Mondo, it was a financial service that let users load money onto prepaid debit cards. Moreover, it allowed users to use an app to track their spending. However, Monzo is now a fully-fledged bank with a license to conduct business in the UK. It is governed by the Financial Conduct Authority (FCA). Additionally, the Financial Services Compensation Scheme (FSCA) is supporting Monzo. You can consider it as an advantage as it safeguards up to £85,000 of your money if the bank runs into difficulties.
As a result, Monzo can provide users with current, joint, teen, business, savings, and ISA accounts. Moreover, it provides you with facilities such as loans, overdrafts, and a variety of cutting-edge services. Above all, it all comes with the knowledge that your money is secure.
To keep up with the technology factor, the bank further decided to go for crypto. Even by the end of the last year, Monzo raised more than £377m at a valuation of £3.4bn as it was getting ready to dive deeper into crypto trading.
However, now that the crypto market seems to be hitting its lowest, what is Monzo’s next move?
Well, it’s nothing but going forward with the previous plan.
The great crypto market meltdown of 2022
Recently, the market capitalization of cryptocurrencies reached a low point. If you’re unaware, a variety of cascading red graphs on several crypto exchanges has driven investors crazy. Moreover, those who were hoping to profit quickly from the digital currency have had their expectations dashed by the current crypto collapse.
The value of the cryptocurrency has seen some of its worst months. Besides, it has misled devoted investors who believed that these assets could provide them with some economic stability.
But, how does crypto get here?
The crypto market fell below the $2 trillion level in January 2022. After that, everything went downward, except for a minor comeback in April. However, crypto is at its lowest point in a long time.
In total, Bitcoin has lost about 70% of its value since hitting an all-time high in November of last year. Meanwhile, other tokens like Dogecoin, Avalanche, and Solana, among others, have suffered losses of up to 90%. The market capitalization of all cryptocurrencies as of right now is $860 billion.
Many professionals view global inflation as one of the main causes behind the industry’s poor predicament.
The US Federal Reserve is trying to fight this recession trap by raising the interest rate. It is one of the biggest increases in interest rates in 28 years. A 0.75% increase may have originally not bothered the crypto market. However, many market analysts think it has increased inflation rates.
What the bank has to say?
During a Financial Times Live event, Jonas Templestein said that the recent crypto market fall “probably…hasn’t altered our ambitions.” He is the co-founder of the challenger bank with headquarters in London. As a result, he further added, the company would continue to research digital currencies and their underlying technology.
Despite the recent crypto crisis, Monzo says it still intends to seek investment opportunities in the market. However, it has joined others in asking for regulation of the virtual currency industry.
Templestein says he has seen that in economies with unstable currencies, having an easily marketable digital store of value has been helpful for many individuals.
Moreover, he adds that blockchain technology is a really intriguing database technology. So, if we use our imagination a little bit further, we might consider it to be an intriguing distributed virtual machine. More like a machine that functions somewhat similar to conventional computing.
However, Templestein cautioned against the necessity for regulation in the industry. He stated that a lack of control had resulted in “suffering” among less informed customers.
So, it seems that creating an entire financial industry, without any regulations, is not such a brilliant concept.
Besides, it’s not a good idea in particular for the less educated consumers. They have, in his opinion, generally suffered over the past few years.
Templestein’s remarks follow recent losses of hundreds of billions in the value of cryptocurrencies. This prompted major corporations to lay off employees and prepare for an impending “crypto winter.”
Even Brian Armstrong, the chief executive of Coinbase, announced this week that the company would be cutting 18% of its personnel. Armstrong added that “a recession might lead to another crypto winter, and could endure for a lengthy period.”
