Bank of America in his annual report to SEC admits that increasing cryptocurrency adoption are posing a threat to the financial institutions. The growing popularity of bitcoin among other digital currencies has led BofA to join the ranks of banks that are preventing their customers to use credit cards to buy cryptocurrencies.
Cryptocurrency adoption poses a question over survival of banks
In an annual regulatory filing to the Securities and Exchange Commission (SEC), the Bank of America, the second largest bank of America stated that cryptocurrencies are posing a serious threat to it. The speculations have always been raving regarding cryptocurrencies like bitcoin presenting a threat to traditional large financial institutions.
In the filing, the bank wrote:
“The widespread adoption of new technologies, including internet services, cryptocurrencies, and payment systems, could require substantial expenditures to modify or adapt our existing products and services.”
In addition to this, it has also been stated that cryptocurrencies also presents the challenge to track the customer funds’ movement, in turn, making compliance with regulations difficult.
In addition, according to the bank, the increased competition from cryptocurrencies can also affect their earnings negatively apart from affecting the interest of clients to do business with them.
The bank stated:
“Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”
Global Cryptocurrency participation is on rising
With the increase in the popularity of the digital currencies, their prices are gaining huge heights. Bitcoin, that was below $1,000 in 2016, got its all-time high at $20,000 last year and is currently riding at $10,157. This surge of interest in cryptocurrencies also led to the launch of bitcoin futures by Cboe and CME.
There has been a substantial increase in these virtual currencies so much so that now countries are developing their own coins in many innovative ways.
However, banks like Bank of America aren’t least bit interested in these cryptocurrencies. This is evident from its wealth management branch Merrill Lynch banning about 17,000 of its financial advisors from buying bitcoin and similar investments for their clients.
BofA issuing warnings against crypto investment
In the 13,000 word segment of the filing, there have been only three references to the cryptocurrencies. However, given the bank’s warning about digital currencies, financial institutions are certainly taking them seriously.
Bank of America is also among those banks that are preventing its customers from using credit cards to purchase the cryptocurrencies while claiming that they just want their customers to be safe.
What are your views on one of the biggest banks of America acknowledging the threat cryptocurrencies pose to their business model? Do you think it will somehow make cryptocurrencies more popular or will it dampen their effect? Let us know below!
I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.