Bank Of America, a massive financial entity by any measure, is warning that cryptocurrencies could potentially undermine its entire business.
In a 13,000-word regulatory filing, the United States’ third-largest bank by assets mentioned cryptocurrencies three times in the documents “risk factors” section.
This is the part of a corporate filing where a company has to point out to potential investors serious risks to its business model.
“The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions,” the bank said.
Bank of America says cryptocurrency is a material risk to its business.
They’re terrified of what’s about to take over.https://t.co/4qsGohVldm
— Erik Finman (@erikfinman) February 26, 2018
Although mostly all consumer banks have rapidly developed their online and mobile offerings in recent years, this regulatory filing definitely shows how they are still very skeptical of crypto’s future.
Bank of America was one of the first institutions to provide mobile offerings in recent years. Their first launch was of Zelle, a payment app that allows for instant settlements of money transfers, a core design of cryptocurrencies.
“Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds,” the bank wrote in their filing.
“Our ability to comply with these laws is dependent on our ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability.”
Essentially, Bank of America is worried about banks not being as popular to the public due to the rise of non-bank money service firms for financial matters like savings, payments, to fund transfers.
“Technological advances and the growth of e-commerce have made it easier for non-depository institutions to offer products and services that traditionally were banking products,” said the filing.
“And for financial institutions to compete with technology companies in providing electronic and internet-based financial solutions including electronic securities trading, marketplace lending and payment processing.”
Bank of America went on to express caution about cryptocurrencies, saying, “Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”
Currently, Bank of America warms they do not offer support for products or how to lead clients on products like cryptocurrencies.
Simply put, it sounds like Bank of America is highly cautious and looks at cryptocurrencies as a mild threat at the moment — but a real threat nonetheless.
“[T]he widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services,” the bank said.
Additionally, Bank of America is one of several major banks in the United States to ban buying cryptocurrency with credit cards. However, they did not ban buying cryptocurrencies with debit cards.
Bank of America CEO Brian Moyihan recently said: “”We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here.”
Nevertheless, Bank of America continues to be a major filer of patent applications for blockchain technology concepts.