US banks urged to include Bitcoin, crypto in their plans for this crucial reason
The American Bankers Association has released a new report in which it advises its members to partner with crypto firms due to the profitability of the space.
In a new report titled “Understanding Crypto: What banks need to know,” the American Bankers Association (ABA) has urged banks across the country to partner with crypto firms.
The need for banks to partner with crypto firms, according to the report, is due to the increased profitability of the sector and rising client interest.
In the 20 page report, while suggesting various crypto use cases for banks with revenue models and regulatory issues for each use case, the group provided a high-level overview of crypto with a glossary, which maps crypto business activities to bank products and services.
American Bankers Association Advises Banks on Crypto Relations
With the increasing profitability of the crypto industry, banks have found it more lucrative to take crypto companies on as partners and their customers as clients while crypto companies need banks to provide access to the payments system to onboard and offload fiat deposits, ABA said in the report.
Some of the suggested partnerships for the banks include payment systems where a blockchain-powered payment network would allow for faster and more efficient international transactions or how the blockchain technology could be utilized to allow for cheaper and secure lending processes.
Other activities that the bank could find indispensable include KYC/AML, digital identity, reporting, and banking, where a bank could offer business banking services to crypto companies.
The ABA further classified crypto assets into four categories: cryptocurrencies, Stablecoins, central bank digital currencies, and non-fungible tokens. Decentralized Finance (DeFi) also got a nod.
It highlighted various use cases of crypto for banks. These cases ranged from Store of Value to Custody / Wallet Provider and Interest Bearing Accounts.
Other use cases cited are payments, lending exchange trading, broker-dealer insurance, network utility, and asset management.
“Blockchains represent a transparent and decentralized way of recording transactions, both financial and non-financial, but their use for the creation, storage, transfer, and trading of cryptocurrencies has grown exponentially over the past few years. At the same time, the crypto industry itself, while novel to many, has reached all-time highs in terms of market size, public interest, and company valuation,” a summary of the report indicated.