Recently, the cryptoinvestment sector has become particularly lucrative, attracting more and more clients. The American Bankers Association (ABA) has released a new report inviting banks to consider partnering with cryptocurrency firms.
The ABA report provides an overview of cryptography and compares cryptocurrency activities with banking products and services. ABA has offered cryptocurrency use cases for banks, with revenue models and regulatory concerns for each use case, Forbes reports.
ABA classified cryptoassets into four categories: cryptocurrencies, stablecoins, central bank digital currencies, and non-fungible tokens. In addition, Decentralized Finance (DeFi) was also mentioned. Among the possible options for using the cryptocurrency were listed:
- Store of Value
- Custody/Wallet Provider
- Interest Bearing Accounts
- Payments
- Lending
- Exchange Trading
- Broker-dealer
- Insurance
- Network utility
- Asset Management
The report says banks are looking for opportunities to provide their customers with access to cryptoassets through their banking relationships. Customer interest prompts banks to consider providing access to cryptocurrency products. The report cites a survey by the institutional cryptocurrency trading and custodian firm NYDIG, which found that 80% of Bitcoin holders would move their Bitcoins to a bank.
ABA emphasizes that with the growing profitability of the crypto industry, banks have found it more profitable to attract crypto companies as partners and their customers as bank customers, while crypto companies need banks to provide access to the payment system for depositing and withdrawing fiat deposits. The proposed partnerships include payments where a blockchain-based payment network can enable faster and more efficient cross-border transactions, or how blockchain technology can enable cheaper and safer lending processes. Other activities include KYC/AML, digital identity, reporting, and banking, where a bank could offer business banking services to crypto companies.
© 2021, Eva Fox. All rights reserved.
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About the Author
Eva Fox
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.
