Banks are encouraged in a new ABA report to work with crypto companies

03. August 2021

Sophie Müller

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A new 20-page report by the America Bankers Association (ABA) suggests that banks should work with crypto companies.

The report pointed out that gamification, environmental concerns and decentralized finances (defi) could be a serious problem.

The American Bank Association (ABA) has published a new 20-page report, which suggests that banks work together with crypto companies in response to the growing demand of customers and the enormous profitability in the industry. The report offers a comprehensive overview of crypto -assets, which depicts its activities with bank products and services. According to crypto-assets, the report stablecoins, cryptocurrencies, the digital currency of the central bank (CBDC) and non-fungible tokens (NFTS) emphasizes.

The report lists some of the most sought-after crypto applications, including as value-to-value, depot or wallet providers, interest-bearing accounts, lending, payments, broker dealers, stock exchange trading, insurance, network security and asset management.

The growing demand for these services can give banks profits through service fees.

80 percent of Bitcoin holders are willing to transfer their assets to banks

loud test report , banks are looking forward to giving their customers access to crypto. A survey carried out by Nydig, an institutional crypto trade and custodian bank company, showed that 80 percent of Bitcoin holders are willing to transfer their assets to banks. This is one of the main reasons for the consideration of giving customers access to crypto products. Banks are encouraged to consider partnerships with blockchain-powered companies for faster, efficient and cheaper cross-border transactions. You will also be encouraged to offer crypto companies on services such as digital identity, reporting, KYC/AML and banking.

With the increasing profitability of the crypto industry, banks have felt more lucrative to gain crypto companies as partners and their customers as customers, while crypto companies need banks to grant access to the payment system to take fiat inlays on board and outsource.

crypto regulations and challenges

The report also offers a comprehensive overview of the regulatory framework for the operation of cryptodicists. The offer or sale of crypto is regulated by the SEC if it is classified as securities according to state or federal law. With regard to money transactions, the report explains how fincen requires the registration of Money Services Business (MSB) and the request of a Money Transmitter License (MTL). For tax reporting, the report mentioned that the IRS crypto classified as property.

The uncertain regulatory treatment of many crypto-assets and the novelty of the business models can often create unclear or different requirements that can leave significant regulatory and supervisory gaps.

Despite the suggestions for banks, to work with crypto companies, the report pointed out that gamification, environmental concerns and decentralized finance (Defi) could be a serious problem. It explains that crypto of regulatory authorities, in particular the unregulated spot market, could be targeted on the basis of a critical examination of toll-free online individual trading brokers. The focus of the financial system on the challenges of climate change could also hinder your penetration into the cryptom market, since assets that use proof-of work can consume a lot of energy.