Of course they are afraid and not only that, they have panic about cryptos, and we can see that on the way they are acting vs Libra, they understand how they are losing control and power, and they don't want that, banks will do almost the impossible to give bad reputation to cryptos, that's a fact. Because now they see them as a public enemy.
You're right. I also see banks shaking from the word cryptocurrency. Previously, they didnt even think that someone could compete with them. And here is an alternative way that might work just fine.
It seems to me that you are exaggerating a little. Yes, banks are undoubtedly cautious about cryptocurrencies, but they are not afraid of them. Or am I still mistaken and do not see the whole picture?