Bank of America warns SEC of crypto risks
“Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds.”
Bank of America has expressed its concerns over the costs and risks associated with increased competition it faces from cryptocurrencies and the various businesses, exchanges and technologies that support them.
As part of its annual filing to the U.S. Securities and Exchange Commission (SEC), America’s second largest bank warned the regulator of the potentially dire impacts of digital currencies on its business operations.
The U.S. financial institution remarked that widespread adoption of technologies, such as crpytocurrencies “could require substantial expenditures to modify or adapt our existing products and services”.
“Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds,” Bank of America (BoA) Corporation said in the report.
The bank added that it faces “significant and increasing competition” within the financial services industry.
“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,” BoA Corporation said. “We operate in a highly competitive environment and will continue to experience intense competition from local and global financial institutions as well as new entrants, in both domestic and foreign markets.”
This increased competition may “negatively affect” earnings by raising pressure to lower prices or standards.
This is the first time that BoA has warned, in writing, about the potential for risk among cryptocurrencies.
However, the bank made greater mention of other potentially risky matters, including Brexit and cybercrime.
Earlier this month, a substantial number of U.S. banks stopped allowing their customers to use credit cards to purchase cryptocurrencies. These institutions include Bank Of America, Citigroup, JP Morgan, Capital One and Discover. Australia’s Commonwealth Bank also banned customers from buying crypto with credit cards.
Following a ban in September 2017, China’s central bank instructed national financial institutions to cease providing crypto services in January, including the prevention and suspension of payment channels used for digital currency settlements. This month, the bank revealed plans to escalate its ban on cryptocurrency trading and initial coin offerings (ICOs) by prohibiting local access to international digital currency platforms.
Digital exchange Coinbase is preventing U.S. users from adding new credit cards as a payment method after warning that credit card companies are able to charge additional “cash advance” fees on crypto purchases.
At the beginning of February an email was sent to Coinbase users with a credit card on file, encouraging them to switch to a debit card or bank account as their primary payment method to avoid incurring extra charges.
European-based digital exchange Bitstamp added independent payment processor Masterpayment as its partner for credit card processing and cryptocurrency purchases in November last year. This allowed Bitstamp customers to spend USD or EUR using Visa and Mastercard credit or debit cards to purchase bitcoin, Litecoin, ether and Ripple. Transaction fees were lowered from 8% to 5% to reflect any potential regulatory changes.
Mobile payments company Square has integrated the ability to buy and sell bitcoin through its Cash App, while trading app Robinhood just launched commission-free cryptocurrency trading for residents in five U.S. states.
A number of the world’s central banks, and the governments responsible for them, have called for tighter regulation of cryptocurrencies in order to prevent misuse, deter anonymous trading and boost transparency.
The Internal Revenue Service (IRS) has set up a taskforce of investigators to track offenders with undeclared U.S. assets, including tax evaders who utilize cryptocurrencies to avoid making necessary contributions.
You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.
- Cryptocurrency: Why all eyes are on eToro’s USA launch
- Bitcoin weekly price analysis 28 August: Token’s value soars in face of ETF rejections
- Most global companies are slow to adopt blockchain technology: PwC survey
- Leading universities are offering a growing number of crypto courses: Coinbase
- Cryptocurrency: Value-making coins vs value-giving coins