Mark Mason
Well-known member
Bank of America Admits Competitive Threat of Cryptocurrencies
The second largest bank by total assets, Bank of America, detailed in an annual report to the SEC that cryptocurrencies pose a threat to their business model.
The bank detailed credit, liquidity, market, geopolitical, and operational risk factors moving into the future, but the threat of cryptocurrencies was a surprising addition to the list. The report touched on the commonly accused threat that cryptocurrencies would “limit [BoA’s] ability to track the movement of funds” and to comply with KYC and AML regulations.
However, the most surprising threat assessment was the realization that crypto could threaten the bank’s overall service business model. BofA outlined that “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,” which would “negatively affect [BoA’s] earnings by creating pressure to lower prices or credit standard.” Bank of America’s risk assessment sees cryptocurrencies as a competitive threat that ranks along side other services that offer consumers more attractive products at more attractive prices. While cryptocurrencies may not be like traditional businesses, they are still putting pressure on traditional banks to change their business models to survive.
The bank detailed credit, liquidity, market, geopolitical, and operational risk factors moving into the future, but the threat of cryptocurrencies was a surprising addition to the list. The report touched on the commonly accused threat that cryptocurrencies would “limit [BoA’s] ability to track the movement of funds” and to comply with KYC and AML regulations.
However, the most surprising threat assessment was the realization that crypto could threaten the bank’s overall service business model. BofA outlined that “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,” which would “negatively affect [BoA’s] earnings by creating pressure to lower prices or credit standard.” Bank of America’s risk assessment sees cryptocurrencies as a competitive threat that ranks along side other services that offer consumers more attractive products at more attractive prices. While cryptocurrencies may not be like traditional businesses, they are still putting pressure on traditional banks to change their business models to survive.