$crypto #banks #Fed #FDIC #SPDI #trading #bitcoin #digital #assets #fintech
“Traditional banks are now seeing the value of crypto and restructuring the legacy systems to the needs and desires of the new consumer generation and changes to rules and regulations” — Paul Ebeling
Some 300 banks are planning to roll out Bitcoin trading on mobile apps in 1-H of 2022. Many of these banks are working with NYDIG, a Bitcoin financial services firm that with inroads into the banking sector, including a sub custody deal with US Bank.
“While fintechs and crypto-native companies have the head start in connecting retail customers to crypto, some forward-thinking banks are now fast followers with the help of companies like NYDIG,” said a JP Morgan analyst in his note yo us.
Large US banks and financial institutions are also dipping into crypto, but are doing so more with institutional custody and trading services.
States such as Wyoming have passed bank-licensing rules for digital assets and have chartered a few firms as “special purpose depository institutions” or SPDIs. Among them are Kraken, the large cryptocurrency brokerage, and Wyoming-based Avanti Bank.
Federal banking rules are not yet crypto-friendly, though. The Federal Deposit Insurance Corp. does not insure Bitcoin or other cryptocurrency deposits. And the Wyoming-based SPDIs haven’t received master accounts with the Fed, though Fed Chairman Powell testified in January that the Fed will “make some progress” on granting access to SPDIs. Banks use master account at regional Fed banks to settle some types of transactions and access the Fed’s payment system directly.
The Biden administration has signaled that crypto banking charters face hurdles. “The rapid introduction of a variety of crypto-asset or digital asset products into the financial system could pose significant safety and soundness and financial system risks,” said the acting chair of the FDIC, in a statement last wk. The FDIC said that digital assets will be a policy priority this year and that “agencies will need to provide robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities.”
Even if crypto does not bring in substantial revenues for banks, it will be a new way to generate fees and retain customers for other products and services.
Since crypto is here to stay banks will be benefiting from investors’ enthusiasm for its crypto plans who’s related profits will be icing on its earnings in a yr or so.
Have a prosperous week, Keep the Faith!
$crypto, #banks, #Fed, #FDIC, #SPDI, #trading, #bitcoin, #digital, #assets, #fintech,
