Banks have a growing cryptocurrency problem. Internal trading desks and a broadening array of clients are pressuring senior management at large banks to launch services around cryptocurrencies.
Compliance departments and boards are less enthusiastic but there is a rising feeling that something must be done to avoid being left behind. It’s just not clear what and how.
The rise of companies built around bitcoin and other digital assets is threatening to make dealers look a bit like Wall Street executives aching to look cool at a hackathon: uncomfortable, filled with fear of missing out and struggling for relevance.
And aside from the potential hazards of crypto somehow dragging their good name through the mud at some point, banks also face a raft of very real challenges in their efforts to go digital: their technology is not up to it; they can’t move fast; they need to comply with regulations that are currently unclear or not yet in place. Talent is growing more and more difficult to find and keep. And what if it all turns out to be a big scam?
Despite the potential challenges, large banks can no longer shrug off digital coins, a market which has grown to $1.8tn in size.
“The digital asset universe is too large to ignore. We believe crypto-based digital assets could form an entirely new asset class,” said Bank of America in its first ever research note dedicated to crypto.
Several large US banks have made announcements about their involvement or planned ventures…