{"id":499611,"date":"2021-06-21T07:57:05","date_gmt":"2021-06-21T05:57:05","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=499611"},"modified":"2021-06-21T07:57:05","modified_gmt":"2021-06-21T05:57:05","slug":"banks-chart-cautious-crypto-policy","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/499611\/banks-chart-cautious-crypto-policy\/","title":{"rendered":"Banks chart cautious crypto policy"},"content":{"rendered":"

Banks looking to expand into the wild world of crypto got a pointed reminder from regulators this month of the risks involved.<\/p>\n

The Basel Committee on Banking Supervision said June 10 that they\u2019re planning to assign Bitcoin, among other crypto products, the toughest capital requirements for any bank that wants to hold it.<\/p>\n

The standard setters said that the risks to financial stability would be significant if banks do expand their offerings in the volatile market.<\/p>\n

That warnings comes with clients showing increasing interest in the assets, leaving firms like JPMorgan Chase & Co, Goldman Sachs Group Inc and Morgan Stanley to wrestle with how best to offer exposure to the burgeoning, and volatile, asset class.<\/p>\n

This year has seen more and more lenders examining how they might broaden their offerings even as caution remains the watchword, according to a Bloomberg analysis of the offerings from some of the world\u2019s biggest banks. While several now clear crypto futures, most have largely steered clear of other services.<\/p>\n

Here is what some banks are doing – or not doing – so far:<\/p>\n

\"\"<\/a><\/p>\n

Goldman\u2019s chief executive officer David Solomon said in Congressional testimony earlier this month that the bank is restricted by regulations from acting as a principal trader in cryptocurrencies or from owning most coins.<\/p>\n

\u201cWe do clear Bitcoin futures,\u201d he said. \u201cWe provide advice to clients, particularly institutions, and high net worth individuals that have an interest in gaining exposure, although often they go to other places to gain those exposures.\u201d<\/p>\n

Linking up with other providers may become the norm. JPMorgan\u2019s crypto strategy depends on following customer demand, according to Daniel Pinto, who heads up the lender\u2019s corporate and investment bank.<\/p>\n

That may mean partnering with an exchange like Coinbase Global Inc for sub-custody if institutional clients want that, Pinto said in April during an interview with Bloomberg News.<\/p>\n

Such exposure isn\u2019t for the faint-hearted. Bitcoin jumped from about $10,000 last September to nearly $65,000 in mid-April. Prices collapsed in May, falling back to the mid-$30,000s, on the back of tougher regulatory scrutiny in China and Elon Musk\u2019s criticism of Bitcoin\u2019s high energy cost.<\/p>\n

Blockchain Embrace<\/strong><\/p>\n

The banks have been quicker to embrace the underlying technology that underpins such digital assets. JPMorgan has been a longtime proponent of Ethereum, the world\u2019s most-used blockchain that uses smart contracts to accomplish blockchain-based tasks that are impossible with Bitcoin.<\/p>\n

In one example, JPMorgan is using its private version of Ethereum to conduct overnight repurchase agreements where digitized US Treasury bonds are swapped for JPM Coin, the bank\u2019s version of a digital dollar. It says it\u2019s doing more than $1 billion of such trades a day.<\/p>\n

There\u2019s still no consensus on the best way to offer exposure to crypto assets themselves. JPMorgan\u2019s Jamie Dimon said at this month\u2019s congressional hearing that his bank doesn\u2019t tell its customers what to do with their money, but he emphasized the importance of caution.<\/p>\n

\u201cWe want to set it up in a way we think it\u2019s safe and proper for them,\u201d he said. \u201cWe\u2019re still working on that.\u201d<\/p>\n

\n

Read: Here is the plan to regulate Bitcoin and other crypto-assets in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Banks looking to expand into the wild world of crypto got a pointed reminder from regulators this month of the risks involved.<\/p>\n","protected":false},"author":59,"featured_media":395577,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[961],"tags":[5537,1999,26,8704,2890],"class_list":["post-499611","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-bitcoin","tag-goldman-sachs","tag-headline","tag-jpmorgan","tag-morgan-stanley"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/499611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=499611"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/499611\/revisions"}],"predecessor-version":[{"id":499667,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/499611\/revisions\/499667"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/395577"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=499611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=499611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=499611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}