The banking industry is racing to catch up and banks want to compete in this new world and profit
Bank of America’s CEO, Brian Moynihan, barred the giant company’s wealth managers from putting any client money into cryptocurrency-related investments.
In 2014, as regulators in New York were exploring ways to control Bitcoin, executives at Wall Street’s biggest banks fretted that regulating cryptocurrencies would also legitimize them — and that could threaten the finance industry. So they tried to sow doubt.
At the World Economic Forum in Davos, Switzerland, that year, Jamie Dimon, the CEO of JPMorgan Chase, the nation’s largest bank, called Bitcoin a “terrible” store of value that was also being used for illicit purposes. At a meeting to discuss violations of Iran sanctions, H. Rodgin Cohen, the finance industry’s preeminent lawyer, warned the state’s regulators that the federal government was “very worried” about Bitcoin and its use.
Those efforts failed. New York’s Department of Financial Services began issuing licenses for Bitcoin businesses in 2015. There are now more than 75 million users of Bitcoin, up from around 3 million seven years ago, and the number of digital currencies has exploded. Globally, 220 million people use cryptocurrencies, according to a July report by Crypto.com.
“Most people agree that in the future — it might be 10 or 20 or years or it might be sooner — effectively all assets are going to be in a digital format,” said Thomas Olsen, a partner at Bain & Co. who advises financial firms on cryptocurrencies and other digital asset matters.
Now the banking industry is racing to catch up. Banks want to compete in this new world and profit. Their approach is two-pronged: experimenting with cryptocurrency offerings and lobbying regulators to create rules that work in the banks’ favor. Some are offering cryptocurrency investments to wealthy clients. Others are weighing trading desks for Bitcoin. JPMorgan started its own digital currency in 2019. And instead of warning regulators away from cryptocurrencies, banking industry representatives now complain that regulators have not acted quickly enough and that their inaction is costing banks valuable time in their mission to compete.
©2019 New York Times News Service