Why is Bitcoin not a collateral in banks - what are their fears?

Bank loans play a crucial role in fostering the development and sustainability of businesses, serving as a means to secure funding and expand operations. In today's evolving world, cryptocurrency is emerging as a digital transaction method. However, banks typically require safeguards or assurances to protect their loaned money, raising the question of whether cryptocurrency can be accepted as collateral in banks.

Are banks actually against cryptocurrency?

Since banks always collect real estate, cash, invoices, inventory etc. as a collateral because it appreciates in the long run in its value; on the other side, Bitcoin keeps increasing in its value, can banks also accept it as a collateral, if no, then why? Could the volatility of Bitcoin be the hindrance - because Bitcoin is a more volatile asset than land? Or are they just fighting crypto adoption?

The volatility of cryptocurrency

Banks may perhaps see that volatility of cryptocurrency can increase the risk of exchange rate fluctuations thereby causing varying amount when repayment will be done. Also, in the interest rate, higher interest rates can make loan repayments more expensive and affect the affordability for borrowers and vice versa.

How will cryptocurrency be in the future?

Based on macro economics, cryptocurrency will always appreciate in value in the long run and if we want to collect loans from the banks, it will be much easier for exchanges to be made. But banks in most countries haven't adopted cryptocurrency, what then could be their fear?

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