Speaking at the World Economic Forum in Davos on Saturday, Bank of America (BoA) CEO Brian Moynihan made some rather curious statements about his bank’s relationship with crypto regulation.
Summary
Bank of America’s crypto operations are being held back by regulation
Moynihan was interviewed by Yahoo Finance and stated that BoA does not intend to go very far into the crypto sector.
What is surprising, however, is the motivation.
In fact, he stated that BoA is heavily regulated, as are all banks, and this would effectively prevent it from moving significantly into cryptocurrencies.
Furthermore, he stated that it is more fruitful for the bank to continue focusing on what it is doing now.
Moynihan revealed that BoA already manages trillions of dollars a day almost entirely digitally, and that they have hundreds of patents regarding the use of blockchain as a process, as a tool, and as a technology.
Despite this, they are not gearing up to offer their clients accounts to manage cryptocurrencies, because they say “we’re not allowed to”.
The reason for these limitations is the regulation that does not allow them to fully engage in this emerging sector.
He added:
“On the trading side, we could do it”.
Indeed, BoA’s research team is active in publishing reports on cryptocurrencies and the bank has an in-house crypto research team.
But despite BoA calling cryptocurrencies “too large to ignore” last year, Moynihan said on Saturday that he does not believe the bank, by giving up offering crypto services to its clients, is missing out on the next big revolution.
Bear market phase creates uncertainty especially among large institutions
Yahoo Finance also reports that there still seems to be strong scepticism towards cryptocurrencies at this year’s World Economic Forum.
Certainly the bear market that started in January does not help the further spread of cryptocurrencies at all, despite the fact that in April for example, a second state in the world adopted Bitcoin as legal tender. It is possible that for a couple of years there will not be another big wave of interest that could attract many traditional financial institutions.
However, the path to adoption seems to have been underway for a few years now and may not stop in the long run, even in the face of prolonged ups and downs.
What Moynihan says raises the prospect that large financial institutions may decide to temporarily stay out of the crypto market because it may not be worth it at this time. The risks are many, not least the legal ones, while the benefits in this bear market may be few.
It remains to be seen, however, whether they will not change their minds even in the event of another strong and prolonged bull run, or whether it is only a matter of time.
