American Banks Encouraged To Partner with Cryptocurrency Firms
August 04 2021 - 11:52AM
NEWSBTC
A recent report from the ABA (American Bankers Association)
suggests that banks partner with cryptocurrency firms due to the
growing client interest and profit in the sector. This 20-pages
report provides a detailed analysis of the crypto, including a
glossary. It also maps cryptocurrency activities to the bank
services and products. The Banker’s association also suggests
crypto use cases for the banking sector with regulatory issues and
revenue models to the use case. Related Reading | Vitalik Buterin
Urges Ethereum To Grow Beyond DApps The report has four distinct
categories of crypto-assets: CBDC (Central Bank Digital Currency),
Cryptocurrencies, Non-Fungible Tokens, and Stablecoins. There was
also a mention of Defi (Decentralized Finance). Cryptocurrency Use
Cases and Regulations According to the report, some of the use
cases of crypto in the banking sector include; Store of value-
Banks can earn revenue by facilitating crypto buying & selling
on their platforms. Custody/Wallet Providers- Banks can offer
digital wallets and charge service fees for them. Interest Bearing
Accounts –Banks can earn a fee on interest through facilitating
lending operations to investors. Lending –Banks can offer
cryptocurrency loans to clients and charge a fee for it Payments-
Banks can charge fees like what happens to credit or debit cards
Broker-dealer-Banks can collect spread from crypto assets
transaction and earn revenue Exchange Trading- Banks can raise
revenue from transaction fees, deposit fees, listing charges, etc.
Network Utility- Banks can offer utility tokens and earn revenue
for creating & selling them. Insurance- Banks can raise
insurance premiums by spreading risks to diverse investors. Asset
Management-Banks can charge a fee on the crypto portfolio
management for clients. Another aspect of the report is surrounding
crypto regulations. It focused on requirements around the sale or
offering of crypto, tax reporting, and money transmission.
According to the report, the SEC regulated the sale of
cryptocurrency. The crypto market seems to be marking a 4% increase
on the daily chart | Source: Crypto Total Market Cap on
TradingView.com For every money transmission, the FinCEN regulates
it and requires operators to register for the MSB and MTL, Money
Services Business, and Money Transmitter Licenses. But tax
reporting lies on the table of the IRS. However, it also pointed
out that there is no clarity on crypto regulations yet. According
to the report, such unclear regulations can create disparate or
unclear requirements. There was also a mention of DeFi,
gamification, and many environmental issues as the risks of the
cryptocurrency industry. What Can Be The Way Forward? According to
the report, banks are very much interested in the crypto industry.
They aim to identify the opportunities to offer exposure to these
assets for their clients. Presently, the growing client interest in
crypto pushes the banks to research ways to provide cryptocurrency
products. There was also a reference to the NYDIG survey that
revealed that 80% of BTC would transfer their asset to banks.
Related Reading | Ethereum Founder Vitalik Buterin Spotted With
Hollywood Celebrities As the report finds, the way forward is that
banks should partner with cryptocurrency companies and accept their
customers as clients. On the other hand, banks will access payments
systems to onboard fiat deposits and offload them. The report also
went further to suggest partnerships that may work between the two
sectors. Featured image from Pixabay, chart from TradingView.com
Ethereum (COIN:ETHUSD)
Historical Stock Chart
From Feb 2024 to Mar 2024
Ethereum (COIN:ETHUSD)
Historical Stock Chart
From Mar 2023 to Mar 2024