Financial Services

How Are Leading Financial Institutions Navigating the Cryptocurrency Market? 4 Highlights From 2021

Bitcoin Concept With Binary Codes

Cryptocurrencies, such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Polkadot, and many more, are taking the investment world by storm. According to CoinGecko, the cryptocurrency market is worth more than $2.35 trillion (as of 01/03/22), and financial institutions, if they haven’t already, are wondering whether they should take a piece of the pie.

Although this market seems promising, the potential for big gains does not come without hefty risk. Cryptocurrencies are volatile – they often fluctuate as much as 10 percent per day. As of January 3, 2022, one Bitcoin is valued at $46,920.48 – this recent dip in value comes alongside the panic over yet another new mutated variant of the COVID-19 virus.

Like many investments, cryptocurrencies are susceptible to risk, but an extra, more complex layer comes with their unregulated territory. Given all these factors, financial institutions do not all share the same stance regarding cryptocurrency, but most have come to acknowledge that their potential for profit is not to be ignored.

Outlined below are some leading financial institutions’ current outlooks regarding their hand in cryptocurrency:

Bank of America

In 2019, Bank of America’s chief executive, Brian Moynihan, prohibited the company’s wealth managers from putting any client money into cryptocurrency-related investments.

In October 2021, however, Bank of America’s Global Crypto and Digital Asset Strategist Alkesh Shah released a 140-page research report regarding digital assets, “Digital Assets Primer: Only the first inning.” The report states that it [digital assets] is “a blossoming asset class that has become too large to ignore.” It also asserts that the digital asset ecosystem has the potential to disrupt all industries.

Bank of America is still not offering concrete digital asset services to their customers, but this report suggests perhaps they are making their way towards participating in cryptocurrency investments.

Bank of New York Mellon

On February 11, 2021, BNY Mellon announced the formation of a new Digital Assets unit, intended to help clients with their digital assets and cryptocurrency needs by delivering a secure infrastructure for all things digital assets. According to Roman Regelman, Senior Executive Vice President, CEO of Asset Servicing and Head of Digital at BNY Mellon, they are the first global bank to provide an integrated service for digital assets. BNY Mellon believes providing these services will improve custody, among other types of investment services.

Northern Trust

In 2017, Northern Trust launched the first commercial deployment of blockchain technology for the private equity market, developed by Northern Trust and IBM and based on the open source Linux Foundation Hyperledger Fabric. Skipping ahead to July 29, 2021, SC Ventures and Northern Trust announced that their institutional grade cryptoasset solution, Zodia Custody, is now providing commercial services to clients as a crypotasset business. Alex Manson of SC Ventures said, “We believe cryptoassets as an asset class is here to stay. We set up Zodia Custody with the clear goal of serving institutional investors who want to invest in cryptoassets in a sustainable, safe and responsible way.”

U.S. Bank

As of October 5, 2021, U.S. Bank has begun offering cryptocurrency custody services to their Global Fund Services clients through a partnership with NYDIG, a company that delivers bitcoin products across various industries. Robert Gutmann, co-founder and CEO of NYDIG says this partnership strives to provide U.S Bank customers with a custody solution that “meets the highest security, compliance and regulatory standards.”

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Interested in discussing how your financial institution can best maneuver the vast cryptocurrency market? Our thought leaders and chief strategists are here to support you— from mapping customer-focused strategies to building and executing experiences that solve your most complex challenges.

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Madeline McDermott

Madeline McDermott is an industry marketing coordinator at Perficient, based out of St. Louis.

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