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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM62602
Volume:
10 |
5 |
May 2026
Pages:
1-31
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Department of commerce
Maharaja Agrasen college, university of delhi
Department of commerce
Maharaja Agrasen college, university of delhi
The emergence of cryptocurrencies has had significant implications on the global financial system, affecting traditional financial institutions both positively and negatively. The research reviews the role of the cryptocurrency in the banking sector, its implications for financial stability, payments, investment markets and regulation. The study showcases the efficiency, transparency, and inclusion benefits of cryptocurrencies as well as the risks associated with them, including price volatility, cyber-attacks, and regulatory uncertainty. Through qualitative secondary data analysis, the study examines how cryptocurrencies are impacting banking and other financial institutions. The study reveals that cryptocurrencies are changing the way banks operate and financial markets function but also pose risks to the financial system as a result of decentralisation. The study also looks at Central Bank Digital Currencies (CBDCs) as guard rail against unregulated cryptocurrencies. The research concludes that cryptocurrencies are unlikely to replace banks in the near future but will bring innovation. It finds there is a need for regulatory measures to ensure stability and inclusive financial development.
KEYWORDS
The overall trajectory of cryptocurrencies suggests neither complete disruption of traditional finance nor their disappearance, but rather a hybrid financial ecosystem. Across the literature, cryptocurrencies are consistently recognized as catalysts for financial innovation, efficiency, and inclusion. They enable faster, low-cost, and borderless transactions, which is especially valuable in developing economies where access to formal banking remains limited. At the same time, their defining characteristics—decentralization, price volatility, and weak regulatory oversight—continue to limit their ability to function as stable money. Empirical studies show that cryptocurrencies are increasingly interconnected with traditional financial markets, transmitting shocks across asset classes such as stocks, commodities, and exchange rates. This growing integration implies that crypto markets are no longer isolated; instead, they are becoming part of the broader financial system, raising concerns about systemic risk. Another emerging trend is the reshaping of financial intermediation. Decentralized Finance (DeFi) platforms are beginning to replicate traditional banking functions such as lending, trading, and asset management without intermediaries. While this creates competition for banks, it also pushes them toward technological transformation, including blockchain adoption and crypto-related services. However, long-term sustainability depends on addressing persistent challenges: Extreme price volatilityCybersecurity and fraud risksEnergy consumption and environmental concernsLack of global regulatory consistencyIn essence, cryptocurrencies are likely to remain a complement rather than a full substitute for traditional financial systems.
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Publication Date
5/6/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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