- Bank of America has formed a crypto research team owing to the high demand for crypto exposure from clients.
- The bank joins many other giant US banks that have had a change of heart in cryptocurrencies, now offering or looking into offering digital asset products to their clients.
Bank of America (BofA), the second-biggest US bank, has launched a cryptocurrency research unit with the hope of scaling its crypto trading business. The bank formed the specialized division over this year’s summer, intending to feed institutional demand to crypto-assets exposure.
In July, the bank reportedly started offering crypto exchange-traded products (ETPs) to its select customers. Even more, the institution highlighted positive implications associated with El Salvador’s Bitcoin strategy. The premier bank took a 180 turn after years of being one of the most vocal Bitcoin bashers.
Earlier this year, the bank published a paper claiming Bitcoin’s failure as a store of value, saying it is “too volatile and impractical.” Moreover, in 2018, Bank of America had blocked its clients from trading and operating with any Bitcoin-related investment options.
Bank of America delegates crypto research team
With its new frame of mind, Bank of America is now designating a dedicated team to research vast digital assets. The new unit is headed by Alkesh Shah, head of Global Cryptocurrency and Digital Asset Strategy. Shah noted:
Bitcoin is important, but the digital asset ecosystem is so much more. Our research aims to explore the implications across industries including finance, technology, supply chains, social media, and gaming.
Additionally, the bank noted in a media statement that digital assets represent a $2 trillion market value, with 200 million users. Crypto assets also have the “potential to transform every industry by improving efficiency and reducing friction across transactions.”
More broadly, Bank of America sees through “a variety of lenses” the lucrative investment opportunities presented by crypto assets. These include “tokens that act like operating systems,” smart contract-powered applications, and stablecoins pegged to fiat currencies. Also in the list are non-fungible tokens (NFTs) and central bank digital currencies (CBDCs).
“Digital assets are transforming the way in which markets, businesses, and central banks operate,” said Candace Browning, head of BofA Global Research.
Financial institutions backtrack view on cryptocurrencies
Bank of America has now joined the growing list of US-based banking giants looking to cash in on the digital asset ecosystem. Others include JPMorgan, Goldman Sachs, and BNY Mellon, to mention but a few. All these traditional financial institutions have started offering Bitcoin and other crypto investment vehicles for their clients.
Previously, JPMorgan was not a fan of Bitcoin, and in fact, the bank CEO continues to bash it. Goldman Sachs said the asset was nothing but a speculative tool. However, growing client demand forced a change of heart in these banks, resulting in the current institutional crypto frenzy narrative.
Despite the regulatory obscurity regarding cryptocurrencies, traditional financial institutions have found a way to offer regulatory compliant products. Presently, there is growing anticipation for US regulators to approve a crypto exchange-traded fund (ETF), which will open the door for other crypto-related offerings.