- REUTERS/Brendan McDermid
- Bank of America mentioned cryptocurrencies in a regulatory risk filing for the first time late Thursday.
- The firm warned that cryptocurrencies could undermine many of its services, and that customers might go elsewhere if the firm fails to adapt.
Bank of America has warned that cryptocurrencies could potentially undermine its entire business, the firm said Friday.
In a lengthy, 13,000-word regulatory filing late Thursday, the US’ third-largest bank by assets mentioned cryptocurrencies three times in the document’s risk factors section.
“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 as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions,” the bank said.
All consumer banks have rapidly expanded their online and mobile offerings in recent years. Bank of America was one of the first institutions to launch Zelle, a Venmo-Like payment app that allows for instant settlement of money transfers, a core tenet of cryptocurrencies, but it’s still worried it could lose its grasp.
Bank of America also expressed concern about the regulatory consequences of cryptocurrencies. “Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds,” the bank continued. “Our ability to comply with these laws is dependent on our ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability.”
Bank of America is also worried about banks falling out of favor with the public, as they flock to non-bank money services firms for everything from savings, to payments, to transfers.
“Technological advances and the growth of e-commerce have made it easier for non-depository institutions to offer products and services that traditionally were banking products,” it said. “And for financial institutions to compete with technology companies in providing electronic and internet-based financial solutions including electronic securities trading, marketplace lending and payment processing.”
When CEO Brian Moynihan was asked about cryptocurrencies in January his answer was simple. “We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here,” he said.
Many financial institutions, including Bank of America, have blocked customers from using credit cards to purchase cryptocurrencies, saying they must use debit cards connected to checking accounts. This could drive people to competitors, the bank said.
“Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies,” it said.