Bank of America COO: Encryption can add more value to banks

As Bank of America began to pay more attention to the crypto sector, the bank’s chief operating officer (COO) stated that he believes that certain features of blockchain and crypto assets can add a lot of value to the bank.

Tom Montag, Chief Operating Officer of Bank of America, said of crypto assets at yesterday’s Chainalysis event: “I believe that some of the things that happened today will provide a technological leap to make the bank more efficient, [have] more There are fewer errors and more compliance. So we look forward to finding a way to best use it and make it part of the system.”

Bank of America officially launched its crypto asset research department last month, led by Alkesh Shah, the bank’s global crypto asset and digital asset strategy head.

In a report titled “Introduction to Digital Assets: Only the First Game” published last month, Bank of America pointed out that as of June 2021, 221 million people have purchased or sold encrypted assets, which is higher than in 2020. 66 million in May.

The report states: “It is difficult to exaggerate the transformative potential of blockchain technology, digital assets, and thousands of decentralized applications that have not yet been created.”

Possibility of providing loans for crypto assets

When Michael Gronager, CEO of blockchain data analysis company Chainalysis, asked about “crypto companies and the agreement to provide crypto asset loans,” Montag said that he thought “something might need to happen” before Bank of America entered the field. . 

Montague explained that Bank of America currently accepts artworks, houses, ships, and even railroad cars as collateral. If the crypto market shows greater stability and lower volatility, Bank of America can consider this in the future.

“Even in the stock market, people can lose a lot of money borrowing stock investment… so you can understand why people worry about what they borrow and how do they make sure they own it?”

Stablecoins need to prove stability

When asked about stablecoins, Montag pointed to Argentina’s failure to base its currency on the US dollar.

According to an economic research report published by the Federal Reserve Bank of San Francisco in 2002, Argentina pegged the exchange rate to the US dollar in 1991, ending hyperinflation and reducing the inflation rate to single-digit levels. In January 2002, it abandoned the peg to the US dollar. Interest rates then continued to rise, and the Argentine currency depreciated by 356% against the U.S. dollar. 

“If the Federal Reserve has a stable currency, you will be very comfortable; if other people have a stable currency, you will be uncomfortable,” he said. “If it’s stable, it’s better, and people feel comfortable, it will benefit the economy, the bank, and everyone. But that’s what I worry about-is it really a stable currency?”

The executive added that he believes that central bank digital currencies (CBDC) are “inevitable”, noting that he expects an increasingly digital financial system to handle CBDC well.

Crypto markets and banks are not competitors

Montag said he doesn’t think the crypto industry will compete with banks. On the contrary, he believes that crypto assets are another asset class, and some people like it for various reasons.

He explained: “I started to think that this is really valuable and understand why it is valuable to people.” “The concept of a global store of value and global movement makes a lot of sense to me.”

Montague said that among the approximately 180 currencies in the world, many people do not want to deposit their money in banks because it can be expensive to transfer funds across borders. Some of the benefits of crypto assets may not be relevant to Americans with more stable currencies.

“I can understand why people like it and want to use it, and want stability,” Montag said.

Next step plan

In addition to the newly launched crypto research department of Bank of America, the company currently promotes the trading of Bitcoin futures ETFs. The strategic direction surrounding the form of banks may allow them to dig deeper into the crypto world, but these remain to be seen.

“Of course we know wallets like Venmo, Square or Robinhood, and what is happening in the crypto space,” Montag said. “We manage $3 trillion in assets, so we are thinking responsibly about what we need to do, what we should provide our customers, and how we should do it.”

Montag believes that the key to a more mainstream acceptance of crypto assets for Bank of America will be consistency [around process and regulation].

“It would be interesting to figure out that crypto assets are really part of a portfolio that someone should own or not own,” Montag said. “We do have fiduciary responsibility for this kind of thing, and it depends a lot on the asset itself and what happens around it.”

risk warning:

According to the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype” issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any business and investment activities. Readers are requested to strictly abide by the laws and regulations of their region and do not participate Any illegal financial behavior.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bank-of-america-coo-encryption-can-add-more-value-to-banks/
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