Litecoin has been quiet for quite some time. In fact, when US SEC considered Bitcoin and Ethereum not as securities. As for the other altcoins such as Litecoin and Ripple, these cryptocurrencies are still in a limbo. Kyle Samani who is the co-founder and managing partner of Multicoin thinks that Litecoin doesn’t even have a reason to exist considering that it is a fork of Bitcoin. However, recent developments may have flipped the scenario for Litecoin.
Charlie Lee’s Litecoin was able to acquire a German bank. And so far, this has been the most significant move in the cryptocurrency’s journey towards mass adoption. This development is worth discussing because it can be transformative in the world of finance.
Back in April, Charlie Lee was exchanging arguments with Derek Capo, the CEO of payment processor TokenPay over Twitter. Their exchange quickly turned into a friendly exchange of direct messages. Both realized that the world is dealing with a problem in banking.
Both Litecoin along with TokenPay both encountered problems when it comes to securing bank accounts. According to Lee, “We had lots of trouble” pertaining to banking. Capo said that “Some banks, they close down bank accounts if they get a whiff anything to do with crypto. We saw a lot of competitors with similar offerings get cut off because they didn’t own the bank and they didn’t have control”.
Instead of working with banks, Capo decided to buy a bank. He believes that this could potentially solve the problem both Litecoin and TokenPay were facing. Capo said that “why don’t we talk about having a Litecoin debit card so that you’ll have a real solution?”. He also added that “because, you know, they had been trying very hard to have a Litecoin debit card…I said, why don’t we talk?”.
And the rest was history. Litecoin was able to end up owning 9.9{4ede17fdd9b4ce8121d01fc4b54913fe84f8215aace504cc657695cefb5329ff} of WEG Bank AG. Another thing is that Litecoin didn’t really buy their share. TokenPay previously acquired the stake and decided to offer 9.9 percent to Litecoin. This was the maximum allowed in German regulations that will not require regulatory requirements.
Future of Litecoin
What exactly does it mean for Litecoin at this point? If everything goes according to plan, this means that Litecoin and TokenPay now have a reliable banking partner that can help popularize the use of blockchain among consumers worldwide.
However, it doesn’t mean that Litecoin has solved the entire cryptocurrency industry’s banking problem. There will still be regulatory hurdles that they still need to solve. For one, converting between fiat and crypto will be a problem.
Merchants are also concerned about accepting cryptocurrencies mainly because of price volatility. A lot of companies make use of payment processor like BitPay in order to convert cryptocurrencies into fiat. And sadly, it incurs processing fees as well.
This is why Capo wants to provide a crypto debit card with the ability to convert Litecoin into Euros via a traditional bank account. And this could potentially be the answer crypto users are looking forward to. Lee said that “Connecting cryptocurrency to fiat rais is very useful”. He also added that “We will have a say in influencing the bank to work on crypto projects”.
