In an annual filing to the Security and Exchange Commission, America’s second-largest bank has expressed fears over cryptocurrency’s potential to undermine the control of major banks.
Making things difficult
It has long been speculated that Bitcoin and other cryptocurrencies pose a threat to major banks and traditional financial institutions. Now, Bank of America admits it could be forced to deal with the “substantial” costs associated with the emerging market.
“The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services,” America’s second-largest bank wrote in its annual filing with the Securities and Exchange Commission.
Additionally, the filing also notes that cryptocurrencies may present serious challenges in regards to tracking the movement of customer funds, and thus may make it less easy to comply with regulations.
With this view in mind, Bank of America has unsurprisingly joined the club of banks which prevent customers from using credit cards to buy cryptocurrencies, claiming, “It’s just our view that customers should be careful here.”
Of course, financial institutions could afford to be a little more careful themselves.
Last week, major credit card company Visa caused an erroneous error, which duplicated Coinbase customers’ purchase orders multiple times. The mistake — which Visa originally blamed on the popular cryptocurrency exchange — drained many customers’ accounts and caused many a headache.
Though proponents of Bitcoin and cryptocurrency have long speculated that major banks and financial institutions are threatened by the new, largely-decentralized market, Bank of America’s annual filing to the SEC is one of the first times this sentiment has been recorded on paper.
BofA’s fear is not without validation. ETF industry veteran and Bitwise executive Matt Hougan recently told Bloomberg Markets that cryptocurrency could see an accumulated market capitalization of $1 trillion by the end of the year, with the market likely reaching upwards of multiple trillions of dollars.
This news also coincides with Bitcoin’s recent fall back under $10k, after battling back from a steep correction in January and February. At the time of this writing, Bitcoin is trading around $10,200 — a pivotal moment of truth for the dominant cryptocurrency, which will likely determine whether or not Bitcoin falls back down towards $9k or regains some bullish momentum.
Do you think Bank of America should be afraid of Bitcoin and cryptocurrency? Let us know in the comments below!
Images courtesy of Wikipedia Commons, Reuters, Visa