Banks cautious about crypto ahead of COVID-19 testimony before US Senate

Major Wall Street financial institution executives will seem before the United States Senate Banking Committee on Wednesday to debate the function of their monetary establishments within the restoration of the American financial system.

Democratic lawmakers plan to grill a quantity of main financial institution execs, whose companies noticed file income through the COVID-19 pandemic whereas common Americans struggled to make ends meet. 

In ready testimonies posted on Tuesday, CEOs on the Bank of America, Citigroup and Wells Fargo described their respective banks’ responses to main challenges comparable to inequality, range, local weather change, taxes, in addition to how their banks deal with cryptocurrencies. 

This 12 months noticed a file bull run in cryptocurrency markets as main monetary establishments opened as much as digital property, including buying and selling desks and custody wings to deal with shopper pursuits in main cryptos like Bitcoin (BTC).

In his testimony, Bank of America CEO Brian Moynihan said that the financial institution is constant to judge the advantages, dangers and shopper demand for crypto-related services. “Currently, we do not lend against cryptocurrencies and do not bank companies whose primary business is cryptocurrency or the facilitation of cryptocurrency trading and investment,” he mentioned.

Moynihan mentioned that BofA can be assessing new applied sciences like distributed ledger expertise, which may doubtlessly ship worth to the financial institution’s clients. However, whereas BofA holds over 60 blockchain patents, the financial institution nonetheless has “not found a use case at scale,” Moynihan mentioned.

Similarly, Citigroup CEO Jane Fraser additionally outlined a measured strategy to crypto, stating that the financial institution might want to guarantee clear controls and governance before participating with cryptocurrencies. “Citi is focusing resources and efforts to understand changes in the digital asset space and the use of distributed ledger technology, including demand and interest by our clients, regulatory developments and technology advancements,” Fraser wrote.

Wells Fargo CEO and president Charles Scharf said that the corporate has been intently following developments round cryptocurrencies. Digital property “have emerged as alternative investment products though their status as a currency and mechanism of payment remains fluid,” Scharf famous. The exec additionally talked about that Wells Fargo is making ready to roll out a pilot for a blockchain-based settlement service inside the financial institution’s world department community.

The Senate Banking and House Financial Services committees may even hear from the CEOs of JPMorgan, Goldman Sachs, and Morgan Stanley. The latter two introduced limited crypto services earlier this 12 months, whereas the previous is reportedly mulling opening a crypto trading desk.

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