Banks are jumping on the crypto bandwagon; here’s how to join in

Posted: 28 February 2022 3:51 pm
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More than 300 banks are planning to allow customers to trade Bitcoin via their bank’s mobile app. You can play the trend with a bank stock or a bank ETF.

For now, you can buy cryptocurrencies via exchanges like Coinbase or apps like PayPal. This is about to change as banks are now looking to capitalize on this emerging asset.

This can be a solid opportunity to invest in such banks before they integrate into the cryptocurrency ecosystem and potentially start reaping the benefits.

What we know so far

There are 300 banks planning to roll out Bitcoin trading on their mobile apps in the first half of 2022, according to JP Morgan. To accomplish this, a lot of these banks work with NYDIG, a Bitcoin financial services firm.

Banks that allow their users to trade and invest in cryptocurrencies will open another revenue stream. This can increase the bank’s value, which should positively affect their stock prices in the years to come.

But it’s not just banks that will likely see the benefit. Users can get access to all of their assets through one bank. What’s more, crypto assets could be regulated in the near future and become safer investments than what they are today.

One bank in the game is Synovus Financial (SNV), a regional bank with $57.4 billion in assets. It now plans to offer crypto trading to its retail customers via NYDIG as well as provide crypto payments and digital banking in 2022.

If you’re considering an investment, see our full guide to Synovus Financial stock.

JP Morgan (JPM) recently opened a hub in Decentraland (MANA), which makes it the first large US bank to join the metaverse. The bank also released a report where it explores opportunities in the metaverse worth up to $1 trillion.

If you’re considering an investment, see our full guide to JP Morgan stock.

Pick the winner or buy an ETF

We already know the names of some of the banks that are working to bring crypto to their customers. But with 300 banks in play this year, it may be hard to choose all the right ones to invest in. This is where bank exchange-traded funds (ETFs) come in. These ETFs invest in a basket of US banks. If these banks adopt crypto and see revenue increases, the whole ETF should benefit.

Some of the popular banking ETFs include:

  • Invesco KBW Bank ETF (KBWB)
  • iShares U.S. Regional Banks ETF (IAT)
  • First Trust Nasdaq Bank ETF (FTXO)

To learn more about ETFs, read our complete guide.

Legal hurdles

Before banks can widely adopt crypto, there are some legal hurdles that have to be cleared. Some states, including Wyoming, have already passed bank-licensing rules for digital assets. However, the Federal Deposit Insurance Corp. (FDIC) doesn’t insure cryptocurrency deposits yet. This may change soon, though.

Three government agencies, including the Federal Reserve, are developing rules around crypto and finding a way to include banks in crypto trading and custody. This could make commercial banks direct competitors to cryptocurrency exchanges and “steal” some of their users.

Kliment Dukovski owns Bitcoin as of the publishing date.

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