RBC Cryptocurrency Policy

RBC Cryptocurrency Policy

Robert McDougall 

January 9, 2024

Cryptocurrency

The Royal Bank of Canada, also known as RBC, is one of the most prominent and oldest financial institutions in North America. The bank has over 1,200 branches worldwide and offers convenient banking to customers.

Based on our experience, the Royal Bank of Canada is fairly digital with a thorough digital-first solution. Account holders can perform most actions through a convenient mobile app, even when they're on the go.

As crypto enthusiasts, we wanted to find out more about RBC’s cryptocurrency policy and have narrowed our findings in this article. The Royal Bank of Canada offers no services to buy and sell cryptocurrencies through their banking platform. However, like most traditional banks in Northern America, RBC allows Canadian investors to transfer CAD from their RBC account into a licensed exchange of their choice. 

In this article, we will take a detailed look at RBC's cryptocurrency policy and how the bank supports crypto investors. While the policies aren't friendly, RBC customers can use the money in their accounts to fund their crypto adventures.

RBC’S Stance on Cryptocurrencies

Royal Bank of Canada customers may feel disheartened at the lack of crypto investment options on the platform, but the situation isn't as dreary as they may feel. From our experience, account holders have the option to purchase cryptocurrency from an exchange of their choice by depositing the money in their RBC account into a safe crypto exchange.

Royal Bank of Canada’s Current Crypto Policy

The Royal Bank of Canada puts customers' safety first and only offers investment opportunities that are safe and recommended for account holders. In line with these policies, the bank does not offer crypto buying, selling, or trading on its platform.

However, to give customers the freedom of choice, and like other competitors in the region, The Royal Bank of Canada does offer account holders the option to deposit funds from their accounts into an approved exchange of choice.

As an account holder, this policy allows you to trade and exchange crypto by following the steps below:

  1. Sign up for a regulated crypto exchange using your email address or phone number. We suggest Bitbuy, but you can look around and make your choice. Once you sign up, you can complete the verification process to meet the KYC measures in place by most exchanges.
  2. After signing into a crypto exchange, you can connect your RBC bank account and deposit CAD from the account.
  3. Finalize the transaction after you’ve added the account and transfer the amount of money you want.
  4. The last step is to start trading on the crypto exchange and buy or sell the cryptocurrency you want to exchange.

The Royal Bank of Canada does not have any additional policies in place governing the amount of money that can be deposited into a crypto exchange or other details. However, it is recommended that you don’t put all your eggs in one basket.

Factors Influencing RBC’s Cryptocurrency Policy

We understand there are numerous factors that govern the Royal Bank of Canada’s cryptocurrency policy. These factors include:

Government Regulations

The Canadian government has set a list of definite rules for crypto trading that banks should abide by. For starters, the Bank of Canada Act stipulates cryptocurrencies as non-legal tender. The Currency Act treats cryptocurrencies the same as commodities, as outlined by the Canada Revenue Agency.

Additionally, new interim rules by Canada's financial regulator require banks to limit their exposure to crypto assets. Limited exposure is necessary for maintaining client interests and safeguarding them from market volatility. We will look at the volatility in detail within the next point.

The definite regulations in place by the Canadian government require the Royal Bank of Canada to limit exposure to crypto investments. So, while the bank does support investing money from bank accounts into verified exchanges, there are no investment opportunities on the portal itself.

Market Volatility

The cryptocurrency investment zone is highly volatile, with investments gaining and losing value without any definite patterns. Trigger events of a speculative nature can lead to meteoric gains or drops in crypto value, often underpinned by public disarray and investor commotion.

Crypto investors have suffered heavily at the hands of Bitcoin halving events and other ICO scams, speculative crypto volatility, and rapid price drops. The Royal Bank of Canada has a reputation to maintain, and as part of it, the bank will do all it can to limit such volatility.

As a result, the Royal Bank of Canada does not offer crypto investments on the platform. Any speculative downfall in crypto investment prices may lead to a drop in trust.

Competitor Policies

The Royal Bank of Canada operates in Northern America and obviously keeps a check on competitor policies and how they view cryptocurrency investments. Currently, all major banks with a growing branch network do not support crypto investments on online or physical platforms.

All of the major competitors from the United States and Canada have no crypto investments on offer and redirect users to depositing sums into a verified crypto exchange. Hence, the crypto policy by the Royal Bank of Canada is in line with what is expected in the current financial climate.

Previous Actions and Statements

While it is clear that the Royal Bank of Canada does not support crypto investments, the bank has shown interest in the avenue during its recent history. According to news reports, the bank explored the option of a crypto trading platform back in 2019 and even talked of in-store and online investment options. However, the plan didn't come to fruition as regulations around cryptocurrencies were tightened, and banks steered clear of scams involving them.

Additionally, we have heard that portfolio managers at the Royal Bank of Canada have decided to take up crypto stocks in 2023. While the managers don't appear bullish or optimistic on many, the addition of crypto investments in financial portfolios may be a good sign of progression. However, it was later revealed that the managers cut most crypto stocks and portfolios.

Pros and Cons of RBCs Cryptocurrency Policy

Royal Bank of Canada’s conservative approach to crypto investments certainly comes with many advantages and a few disadvantages. Let us look at them:

Advantages of RBCs Conservative Approach

We start by mentioning the advantages in detail:

Minimizing the Risk of Money Laundering and Financial Fraud

Crypto investments have long been categorized as the black sheep of the financial world. While the decentralized world of digital currencies is super exciting for investors, it also provides an avenue for money laundering and financial fraud.

Having engaged with multiple exchanges, we understand just how easy it is to launder money through crypto and how many criminals have successfully run scams and financial fraud through these investments.

The Royal Bank of Canada is known for its smooth processes and steers safe of any investment opportunity that remotely presents the opportunity of laundering money. In line with this, we feel the current crypto policy by RBC makes complete sense and is advantageous for the bank and its customers.

Even while giving account holders the freedom to deposit their money in external exchanges, RBC has certain restrictions in place. Account holders can only deposit money in FINRA-recognized platforms with KYC measures in place.

Protection Against Potential Losses and Volatility

As we’ve stated, the Royal Bank of Canada has a reputation to maintain and only offers investment opportunities that are known to be less volatile. Cryptocurrencies aren’t reliable and can be too volatile for customers of the bank.

Compliance with Regulations

As we have discussed in detail above, the Royal Bank of Canada has measures in place to comply with the regulations set for conventional banks in the United States. The regulations limit the bank from offering crypto investments that can lead to volatility in the near future.

Disadvantages of The Royal Bank of Canada’s Conservative Approach

We now move to the disadvantages of RBCs cryptocurrency policy:

Missing the Boat: Growth and Innovation Opportunities

RBC's no-crypto policy, although providing a bedrock of stability, may also stunt its potential for growth and innovation.

The reluctance to offer crypto investments is not only limiting the bank's growth opportunities but also stifling the potential for innovation. As neo-banks come up with crypto funds and trading opportunities, RBC has missed the trick with its inability to offer crypto checking accounts. The accounts could have functioned the same way as a traditional account, allowing customers to save their cryptos in a secure environment, while withdrawing and depositing cryptos. 

Fishing in the Wrong Pond: Alienation of Tech-Savvy Customers

All of us know that time and tide wait for no man, and in RBC's case, the roll of the tide is shoving tech-savvy customers away. Modern customers are eager to try new opportunities, always ready to jump on the bandwagon when it comes to new tech trends, especially those related to digital currencies.

RBC's traditional banking methods are starting to appear as old as the hills to them. With alternatives like the Cash App and Juno coming up, customers might jump ships. 

Catch-22: Competitors' Strategies and Market Implications

As we have discussed earlier, alternatives like Revolut and the Cash Pay app are popping up left, right and center. In this race against time, RBC and many other traditional banks may face the wrath of time, as customers move to less conservative options. 

Additionally, as the interest surrounding cryptocurrencies increases, customers would want a safe place to store their assets. The current strategies in place may drive customers away from RBC and into the hands of alternative competitors. 

Customer Perspectives and Reactions

Based on our analysis of the current financial market, customers are aware of the changing finance trends and are looking for more customized requirements. The cautious approach by RBC may align with what some customers may expect, but it can also turn other digital consumers away.

Surveying RBC Customers’ Opinions on Cryptocurrency

The COVID-19 pandemic was an unprecedented time for all of us. While the world of finance is recovering from the short-term trends of the pandemic, a 2021 survey by RBC has revealed that small businesses or other clients may not move away from their interest in crypto investments and digital methods of payment.

We studied the research and found “a growing demand for digital payment and engagement options: eCommerce and digital solutions were already on the rise pre-pandemic, but they became pandemic necessities as businesses adapted to health and safety.”

The survey also found that customers were interested in digital investment options and preferred their bank of choice, RBC, in this case, to offer such opportunities.

Customer Sentiments Towards the Bank’s Policy

Based on results from the J.D. Power's 2022 Canadian Retail Banking Satisfaction Study, the Royal Bank of Canada was ranked number 1 in Canada. The bank ranked number one for trust, account offerings, and convenience.

While we cannot find anything directly related to customer sentiments on RBC’s crypto policy, we do know that customers of the bank have given RBC a 3.7 rating on Consumer Affairs and 1.7 on TrustPilot. The rating is fairly poor and can partly be attributed to the bank’s policy on cryptocurrencies.

Comparison with Other Banks

The Royal Bank of Canada is among the top-rated banks in Canada and offers similar policies to what the top banks in Canada and even the United States offer.

From our understanding of bank policies, the traditional finance world is currently complying with regulations and not eagerly offering crypto investments. However, the external threat from neo-banks and micro-investment funds is still prevalent. Customers are moving towards financial apps like Cash App and Juno that offer crypto funds with similar withdrawal and deposit benefits of a bank. 

Future Outlook and Potential Challenges

While cryptocurrencies evolve with time, the future presents a new set of opportunities and challenges for banks like RBC. We believe the regulatory setting may just change for the better, and we can expect a more favorable policy soon.

Let’s see why we say so:

Potential Impact of Regulatory Development

Current regulations in play within the Canadian financial industry limit banks from offering crypto investments and funds. However, the regulations can change and RBC can even find a balance between compliance and innovation. 

Favorable regulatory developments could potentially change the banking sector's perspective on cryptocurrencies. Banks, due to their legacy systems and existing regulations, typically view cryptocurrencies with caution.

However, with clear and supportive regulations, banks could move towards more proactive roles like becoming mediators for cryptocurrency transactions, open banking platforms for currency exchanges, or even offering crypto banking products to their customers.

Considerations for RBC to Revise Its Cryptocurrency Policy

The way the cookie crumbles, it could be a good time for RBC to think about a course correction. So, let's dive right into the considerations RBC can follow to revise its cryptocurrency policy: 

The Popularity of Cryptocurrencies

It's clear as day that cryptocurrencies are more than just a fad. In the fast-paced world of financial technology, it pays to keep up.

Currently customers can maintain a crypto account in online neo-banks like Uphold. The account creation process is simple, and customers can generate profits on their saved cryptocurrencies and investments. The popularity of such accounts is at an all time high, and we feel RBC can also think of such an approach. 

Reading the Tea Leaves: Assess Market Trends

As they say, the proof of the pudding is in the eating, so we've got to consider market trends. The tide seems to favor cryptocurrencies, with other banks "making hay while the sun shines" and including cryptocurrencies in their portfolio. So, there's no time like the present for RBC to weigh its options and decide whether to join the bandwagon or be left in the dust.

Walk a Mile in Their Shoes: Customer Preferences

Every businessman knows "The customer is king." Therefore, RBC should consider its customers' preferences. Their tech-savvy clientele might want to dip their toes into the cryptocurrency waters.

It's safe to say if RBC doesn't attend to its customer's needs, some other bank will - after all, one bank’s loss is another bank’s gain.

Conclusion

In summary, it is best to reiterate that Royal Bank of Canada customers cannot purchase digital assets or cryptocurrencies. The only way to use the funds in your RBC account for crypto investments is by depositing the amount in a FINTRAC-approved exchange.

RBC must keep its eyes peeled for changes in the regulatory landscape and be flexible enough to seize opportunities or weather the storms that may arise. A well-adapted cryptocurrency policy could allow RBC to ride the wave of innovation while remaining compliant with the ever-evolving regulatory framework.


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