The Basel Committee on Banking Supervision said on June 10 that it plans to assign Bitcoin, among other crypto products, the most stringent capital requirements for any bank that wishes to own it. Standard setters said the risks to financial stability would be significant if banks expand their offerings in the volatile market.
Bitcoin fell around 10% to two-week low after China on Monday announced that it has summoned officials from its largest banks to reiterate the ban on providing cryptocurrency services. This is the latest sign that China is planning to do everything in its power to close the gaps left in crypto trading.
The warnings come as customers show increased interest in assets, leaving businesses such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley to find the best way to provide exposure to the growing and volatile asset class.
This year, more and more lenders have considered how they could expand their offerings, although caution remains the order of the day, according to a Analyse Bloomberg offers from some of the biggest banks in the world. While several crypto futures are now clear, most have largely avoided other services.
Here’s what some banks are doing – or not doing – so far:
Goldman chief executive officer David Solomon said in congressional testimony earlier this month that the bank is barred by regulation from acting as a primary cryptocurrency trader or owning most cryptocurrencies. rooms.
“We are clarifying Bitcoin futures,” he said. “We provide advice to clients, especially institutions and high net worth individuals who have an interest in exposing themselves, although they often travel to other locations to obtain these exposures. “
Connecting with other suppliers may become the norm. JPMorgan’s crypto strategy depends on tracking customer demand, according to Daniel Pinto, who heads the lender’s corporate and investment banking. That may mean partnering with an exchange like Coinbase Global Inc. for the underwriting if institutional clients so desire, Pinto said in April in an interview with Bloomberg News.
Such an exhibition is not for the faint hearted. Bitcoin has gone from around $ 10,000 last September to nearly $ 65,000 in mid-April. Prices collapsed in May, falling back to the mid-$ 30,000 mark, following stricter regulatory scrutiny in China and Elon Musk’s criticism of Bitcoin’s high energy cost.
Embrace the blockchain
Banks have been faster to adopt the underlying technology behind these digital assets. JPMorgan is a long-time supporter of Ethereum, the world’s most widely used blockchain that uses smart contracts to accomplish blockchain-based tasks that are impossible with Bitcoin.
In one example, JPMorgan uses its private version of Ethereum to conduct overnight buyback deals where digitized US Treasury bonds are traded for JPM Coin, the bank version of a digital dollar. He says he conducts over $ 1 billion in such transactions per day.
Learn more about banks and blockchain
There is still no consensus on how best to provide exposure to the crypto assets themselves. JPMorgan’s Jamie Dimon said during this month’s congressional hearing that his bank doesn’t tell customers what to do with their money, but he stressed the importance of caution.
“We want to set it up in a way that we think is safe and appropriate for them,” he said. “We are still working on this. “
– With the help of Samuel Dodge and Joanna Ossinger
(Updates with China’s crackdown in the third paragraph.)