The impact of digital currencies on traditional banking includes challenges to the established financial system, as cryptocurrencies offer decentralized alternatives to conventional banking services. Digital currencies facilitate borderless transactions with lower fees and faster processing times, compelling banks to enhance their services and adapt to changing consumer preferences. Moreover, the rise of blockchain technology is driving banks to explore innovations such as smart contracts and digital asset management. Conversely, regulatory challenges arise as governments seek to establish frameworks to manage risks associated with cryptocurrencies, impacting how traditional financial institutions operate.