- Bank of America research published Tuesday shows banks like JPMorgan and Citi use blockchain technology.
- Other smaller banks said they are open to allowing clients to hold cryptocurrencies in the future.
- The research sheds on light on where traditional financial institutions stand on blockchain amid bitcoin’s massive rally.
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A research report from Bank of America shows banking behemoths JPMorgan and Citi are using blockchain technology, while other banks are considering allowing commercial and institutional clients to hold cryptocurrencies in their accounts.
BofA analysts led by Erika Najarian compiled responses from banks they cover regarding use of blockchain technology and willingness to facilitate crypto transactions.
They found that 21% of banks they cover have incorporated blockchain technology into their businesses in some form. Blockchain is a digital ledger and the technology used to transact with cryptocurrencies like bitcoin.
JPMorgan, Citi, Wells Fargo, US Bancorp, PNC, Fifth Third Bank, and Signature Bank are among some of the banks that said they use blockchain.
While JPMorgan and Citi did not specify in what capacity they use blockchain technology, Wells Fargo highlighted its WFC Digital Cash platform, which allows investors to transfer accounts between Wells subsidiaries. Meanwhile Fifth Third said blockchain technology is in use “in very limited cases for sensitive information.” PNC was the first US bank to join the Ripple network.
Meanwhile, no banks under BofA coverage are facilitating crypto transactions or allowing customers to hold crypto in accounts at this time. However, Citizens Financial Group said they are open to allowing clients to hold crypto in theory at some point, but would need to develop a robust anti-money laundering infrastructure. US Bancorp told BofA they’re “currently looking at applications of blockchain technology and crypto opportunities at the commercial bank.”
Several banks said they are waiting for regulatory clarification on providing cryptocurrency custody services before adopting the digital currency.
According to BofA analysts who conducted the study, the consensus among banks was that any future application of cryptocurrency would be concentrated in commercial, custody, and commercial payments rather than retail clients.
Also, Citi is “more focused on tokenization” than facilitating cryptocurrency transactions, according to BofA, while JPMorgan is “actively assessing if they will take cryptocurrency in accounts.”
The research sheds a light on where major financial institutions stand with regards to blockchain technology and cryptocurrency amid bitcoin’s epic rally.
“While the future of cryptocurrencies is still oft-debated by the market, many investors view blockchain broadly as general ledger technology that is key for banks to unlock efficiencies in the future. As such, we see this wide gap in blockchain technology (and willingness to adopt it) as potentially telling of a bank’s tech investment strategy,” the analysts said.