The second-largest US bank, Bank of America (BofA), has established a cryptocurrency research division in an effort to grow its cryptocurrency trading venture. As of this summer, the bank had formed this sophisticated segment in order to meet institutional requirement for exposure to crypto-assets such as bitcoin.
The bank reportedly began offering crypto ETPs to a chosen group of customers in July. Furthermore, the organization emphasized the advantages of El Salvador’s Bitcoin policy. After years of being one of the loudest critics of Bitcoin, the prestigious bank has done a complete about-face.
Bitcoin has failed as a store of value because it is “too volatile and unrealistic,” according to a paper published by the bank earlier in 2021. Bank of America had also barred its customers from trading in or using any Bitcoin-related investment options as of 2018.
Now that it has a new outlook, Bank of America has established a working team to comb through the extensive digital assets under its management. Alkesh Shah, the chief of Global Cryptocurrency and Digital Asset Strategy, is in charge of the new division.
“Bitcoin is essential, but the digital asset environment is much more,” said Shah. There are repercussions in a variety of industries, from finance to technology to supply chains to social media and gaming. That’s the goal of our research. Digital assets have a market value of $2 trillion, and there are 200 million people using them, according to a bank statement to the media. Apart from improving efficiency and minimizing friction, cryptos have the “ability to transform every sector”
In general, Bank of America sees the profitable investment opportunities presented by cryptocurrencies through “a wide range of lenses.” Stablecoins linked to fiat currencies include “tokens that function as operating systems,” smart contract-aided applications, and others.
Aside from that, there are also non-fungible tokens (NFTs) and digital currencies issued by central banks (CBDCs). BofA Global Research director Candace Browning says cryptos are changing the way marketplaces, enterprises, and central banks function.
As more US-based banks look to cash in on the crypto currency environment, Bank of America has added its name to the list. JPMorgan, Goldman Sachs, and BNY Mellon are just a few of the others in this list. All of these well-established financial institutions are now allowing their customers to invest in Bitcoin and other cryptocurrencies through their services.
Earlier, JPMorgan was not a fan of Bitcoin; in fact, the bank’s CEO continues to be critical of the digital currency. The asset, according to Goldman Sachs, was nothing more than a speculative gimmick. This has led to the prevailing institutional cryptocurrency craze story, but increasing user demand compelled these banks to change their minds.
Traditional financial institutions have figured out a way to provides products that comply with regulatory requirements regardless of the lack of clarity surrounding cryptocurrencies. The US regulators are expected to endorse a crypto exchange-traded fund (ETF) soon, opening the door for more crypto-related offerings. This is expected to happen soon.
