The American Banker Association (ABA) Suggests Partnership with Crypto Firms as Demand Increases

Sahaj  |  Aug 3, 2021

The American Banker Association (ABA) has recently issued a report that suggests banks should partner with crypto firms in response to the growing demands from clients. As revealed, the report provides a thorough overview of crypto assets, which outlines its activities with the products of bans and their services.

American Banker Association (ABA) Suggests Partnership with Crypto Companies

Singling out the crypto assets, the American Banker Association mentioned stablecoins, cryptocurrencies, CBDCs or Central Bank Digital Currencies, and NFTs or Non-Fungible Tokens in its report.

The report lists some of the most desired crypto use cases involving a store of value, custody of wallet provider service, broker-dealer, interest-bearing accounts, exchange trading, asset management, and network security. As suggested by ABA, the above features might lead banks to partner with crypto firms.

In accordance with the report, banks are looking forward to providing their customers access to cryptocurrencies. In a survey conducted by an institutional crypto trading and custodial company, NYDIG, it was disclosed that:

“With the increasing profitability of the crypto industry, banks have found it more lucrative to take crypto companies on as partners and their customers as clients while crypto companies need banks to provide access to the payments system to onboard and offload fiat deposits.”

Challenges Faced by Crypto Assets

In addition to this, it should be noted that the ABA report on crypto firms mentioned details for tax reporting and said:

“However, the uncertain regulatory treatment of many crypto assets and the novelty of the business models can often create unclear or disparate requirements that may leave significant gaps in regulation and oversight.”

Though the report was somehow in the favor of cryptocurrencies and digital assets, it did mention the threats some of the crypto products possess. 

It is said that gamification, Defi, and other concerns related to the environment can pose a serious problem. Also, it is revealed that there are chances that crypto may be targeted by the regulators.

Moreover, the focus of the financial system to address the challenges of climate change could hamper their perforation into the crypto market as assets that still make use of PoW consensus, consumes a lot of energy.

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