Top US Banks Discuss Crypto Expansion, Initial Approach Remains Tentative: Report

Some of Wall Street’s major banks are having internal talks regarding crypto expansion, four industry sources told Reuters. However, the initial steps might be tentative.

With the current pro-crypto US government and evolving regulatory landscape, large lenders are considering crypto pilot schemes, partnerships and limited crypto trading.

According to the four unidentified executives, banks are still hesitant to be the first to expand more into crypto. They fear falling into difficulties in case of a change in rules.

Firms await to follow major banks venturing into crypto after a few test cases, they added.

The pro-crypto stance is encouraging for traditional lenders, said Dario de Martino, from A&O Shearman, M&A partner who works on crypto-related issues.

“But they are still approaching it with caution and viewing the changes in regulation as an opportunity to engage and not a free pass,” Martino added.

Traditional banking giants JPMorgan, Bank of America, Citi and Wells Fargo are considering a consortium-backed stablecoin to compete in the crypto space.#Stablecoin #Banks https://t.co/sWFJQ8R9oD

The sources further noted that some of the banks are keen on custody businesses to store and manage cryptos.

Bankers and executives noted that financial institutions are keen to enter custody businesses through partnerships with existing crypto firms.

The increased interest from lenders follows the rescind of controversial Staff Accounting Bulletin – SAB 121. Former SEC Chair Gary Gensler supported the bulletin, which placed certain accounting burdens on banks that made it difficult for them to provide custody services for digital assets.

The rule gained widespread criticism for asking banks that hold crypto to record them as liabilities in their balance sheets.

“Traditional banks are slow to adopt crypto due to its complexity,” Gadi Chait, Xapo’s Investment Manager, told Cryptonews in an exclusive interview. “So far, outdated infrastructure, regulatory uncertainty, and internal scepticism have hindered their ability to keep pace with the surging consumer demand for crypto-enabled banking services.”

According to Chait, interest from big banks is indicative of a broader trend associated with the institutional adoption of digital assets.

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