Banks are starting to recognize the potential of digital technology and assets, but they may not fully grasp the level of dedication required to succeed.
Lead Bank co-founder and chief legal and risk officer Erica Khalili stated that it is a challenging time to be in the crypto banking sector during a panel discussion at Ripple Swell in Miami, Florida.
According to Khalili, banking in the crypto sector demands significant investment and the ability to maintain a specific relationship with regulators.
Banks Must Have a Strategy to Meet Regulations
Khalili emphasized the importance of regulatory clarity and collaboration among banking regulators as more banks enter the sector:
“For a long time, there was an intent to live in the gray area and that was fine and it worked and we were all kind of OK with it.”
Many banks are striving to comply with regulations from the beginning, which is quite challenging.
Lead Bank has adopted a three-pronged approach to managing regulatory relationships, starting with education to challenge negative perceptions of crypto with real-life use cases.
The influence of digital assets on capital markets is already apparent, demonstrating the potential of the technology. Efficient monitoring capabilities provided by digital technology are also crucial for both bankers and regulators.
“Regulators get that direct oversight where we’re not looking to like spurn regulation, we’re embracing it.”
Lastly, Khalili stressed the importance of patience in navigating the evolving regulatory landscape.
Related: Be persistent with the SEC, says Franklin Templeton digital asset head
Banking with a Purpose
Khalili cautioned that the investment required to succeed in the digital asset banking sector makes it impractical for banks to merely dip their toes in out of curiosity or for cost reduction purposes.
She highlighted the importance of deep knowledge, investment in products, technology, and personnel for success in the sector.
Erica Khalili (second right) at Ripple Swell. Source: Turner Wright/Cointelegraph
Khalili and three other co-founders acquired Lead Bank in Kansas City, Missouri, in August 2022 for the explicit purpose of providing banking services to the crypto sector.
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