Cryptocurrencies are a threat to the business model of Bank of America: In the recent annual report filed by Bank of America, cryptocurrencies are listed as a threat to the business model.
The report was filed on February 22. It was filed on the SEC website. While the other risk involved economic, geopolitical risk but cryptocurrencies were also mentioned in the list.
The bank has also recently taken steps to ban the use of its credit cards for buying cryptocurrencies. According to the report, the consumers using cryptocurrencies in order to complete their transactions are a threat to the business model of the bank.
Even though Bank of America is currently the 2nd largest bank in United States but still, the widespread usage of cryptocurrencies scares the bank. The bank currently earns a lot of its commissions from the transactions as well as related services which it provides to its customers.
Any modification of these procedures can lead to loss of income for the bank.
The bank also stated that the extensive use of blockchain technology, as well as cryptocurrencies, will make it difficult for the bank to comply with anti-money laundering features.
This can result in the bank being in hot waters with the regulators. This is another risk which the bank recently mentioned.
This is the 1st admission of the bank that cryptocurrencies are actually a risk to the traditional banking business model.
Most of the banks are already aware that if cryptocurrencies become mainstream, their businesses will suffer. This is the reason why the banking system is incorporating the underlying blockchain technology but not cryptocurrencies.
Also, many banks are banning the use of credit cards in order to prevent the widespread acceptance of cryptocurrencies.
Bank of America is not the only bank which has banned the use of credit cards for buying cryptocurrencies. Citibank is following suit. Moreover, JP Morgan has also done the same.
Banks are trying to protect their traditional business model by slowing down the usage of cryptocurrencies.
Many users still are finding workarounds as well as different ways in which they will be able to buy cryptocurrencies. The volume of cryptocurrency trading is increasing day by day.
Thus, it remains to be seen whether in the longer term it will have any impact on the spread of cryptocurrencies or not.
For now, however, this is surely an interesting admission by the Bank of America as it is the 1st move by any traditional and large bank.