The crypto industry might witness a new wave of institutional support as the American Bankers’ Association (ABA) has recommended that its members partner with crypto firms in its new report titled “Understanding Crypto: What banks need to know.”
According to the report, banks in the country can no longer afford to avoid the crypto industry due to the increased demand by clients and also the high level of profitability of the space.
The report categorized crypto assets into four classes such as cryptocurrency, stablecoins, central bank digital currencies (CBDC) and non-fungible tokens (NFT). While also making a mention of the nascent Decentralized Finance (DeFi) space.
It continued that banks could find up to 10 use cases for these crypto classes in the following ways: Store of Value, Custody, Interest Bearing Accounts, Payments, Lending, Exchange Trade, Broker-dealer, Insurance, Network Utility, and Asset Management. Per the report, a bank could capitalize on any of these use cases for its own profitability and use.
The ABA report also highlighted the lack of regulatory clarity battling the crypto space. It wrote that “the uncertain regulatory treatment of many crypto assets and the novelty of the business models can often create unclear or disparate requirements that may leave significant gaps in regulation and oversight.”
Citing a survey by NYDIG which states that 80 percent of Bitcoin holders would love to move their digital asset holding into a bank, the report stated that “banks have found it more lucrative to take crypto companies on as partners and their customers as clients while crypto companies need banks to provide access to the payments system to onboard and offload fiat deposits.”