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American Banks Encouraged To Partner with Cryptocurrency Firms

American Banks Encouraged To Partner with Cryptocurrency Firms

American Banks Are Being Encouraged To Partner with Cryptocurrency Firms

Image Credit: Pixabay.com

A recent report from the ABA (American Bankers Association) suggests that banks partner with cryptocurrency firms due to the growing client interest and profit in the sector.

This 20-pages report provides a detailed analysis of the crypto, including a glossary. It also maps cryptocurrency activities to the bank services and products. The Banker’s association also suggests crypto use cases for the banking sector with regulatory issues and revenue models to the use case.

Related Reading | Vitalik Buterin Urges Ethereum To Grow Beyond DApps

The report has four distinct categories of crypto-assets: CBDC (Central Bank Digital Currency), Cryptocurrencies, Non-Fungible Tokens, and Stablecoins. There was also a mention of Defi (Decentralized Finance).

Cryptocurrency Use Cases and Regulations

According to the report, some of the use cases of crypto in the banking sector include;

Another aspect of the report is surrounding crypto regulations. It focused on requirements around the sale or offering of crypto, tax reporting, and money transmission. According to the report, the SEC regulated the sale of cryptocurrency.

The crypto market seems to be marking a 4% increase on the daily chart | Source: Crypto Total Market Cap on TradingView.com

For every money transmission, the FinCEN regulates it and requires operators to register for the MSB and MTL, Money Services Business, and Money Transmitter Licenses. But tax reporting lies on the table of the IRS.

However, it also pointed out that there is no clarity on crypto regulations yet. According to the report, such unclear regulations can create disparate or unclear requirements. There was also a mention of DeFi, gamification, and many environmental issues as the risks of the cryptocurrency industry.

What Can Be The Way Forward?

According to the report, banks are very much interested in the crypto industry. They aim to identify the opportunities to offer exposure to these assets for their clients.

Presently, the growing client interest in crypto pushes the banks to research ways to provide cryptocurrency products. There was also a reference to the NYDIG survey that revealed that 80% of BTC would transfer their asset to banks.

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As the report finds, the way forward is that banks should partner with cryptocurrency companies and accept their customers as clients.

On the other hand, banks will access payments systems to onboard fiat deposits and offload them. The report also went further to suggest partnerships that may work between the two sectors.

Featured image from Pixabay, chart from TradingView.com
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