Crypto-Banking union thrives without FED support, beyond US borders

Mainstream banks around the world are trying crypto-related products with their customers.

Ranging from Bitcoin to complex De-Fi instruments, financial institutions are advancing to offer evolving and relevant products to their customers. However, with the FED undecided on the crypto front, the US counterparts prefer the investment route to affirm a stake in the business until the central bank’s direct trade of digital products is legitimized.

Some non-US banks and their governments on including crypto assets in the banking system:

Banco Bilbao Vizcaya Argentaria(BBVA)

Spain’s second-largest lender by asset base allowed its customers in Latin America and Turkey to trade and held Bitcoin(BTC) and Ether(ETH) through a digital account since 2020.

The bank recently introduced the crypto feature to Swiss customers through their local subsidiary. As a result, Private-bank customers of BBVA Switzerland and holders of a digital account with deposits of more than €10,000—the equivalent of about $11,000—can invest in bitcoin and ether.

“Financial institutions can play a role in facilitating the access to digital assets to different client segments and bundling digital assets with traditional investments as well,” said Alicia Pertusa, BBVA’s head of client-solutions strategy. 

Standard Chartered (United Kingdom) with an investment of about $380 million across 6 crypto projects including Ripple (market capitalization of over $48 billion) and Cobalt, a trading technology provider, the London based bank plans to offer crypto wallets to its customers, in a safe and efficient fashion.

Commonwealth Bank of Australia

The largest bank in the country has launched a pilot program for its 6.4 Million plus retail customer base to trade cryptocurrencies. In addition, the bank has partnered with New York-based exchange Gemini Trust Company LLC to offer a “crypto exchange and custody service” through an update in its existing mobile banking app.

German savings banks, which serve over 50 million of the country’s 80 million population, are considering offering cryptocurrency wallets. This could be a way for banks to capitalize on current amplified interest in crypto in Germany, where negative interest rates and inflation fears have made citizens look for alternative investment avenues.

Alexander Hartberg, a spokesman for the group of savings banks, quoted,” One in 10 customers of German savings banks owns some kind cryptocurrency asset. So, considering their expectations, the group also has to look into crypto assets.

Brokerage firms and NBFCs fuelling the growth

Custody banks such as Bank of New York Mellon Corp. and Fidelity Investments plan to introduce bespoke crypto products for institutional clients like portfolio managers and hedge funds.

“While a majority of blockchain technology focussing on retail trade, we believe the requirements of the asset managers community is a glaring void to fill. This will also help establish the digital currencies into mainstream investments”, tweeted Fidelity Investments.  

Payments companies such as PayPal Holdings Inc. or online broker Robinhood Markets Inc. offer customers access to owning and trading cryptocurrencies. More than 63% of all the cryptocurrency trade occurs at two exchanges, Cayman Islands-based Binance and the American Coinbase Global Inc., providing the infrastructure to support the transactions.

Cautious advancements by the Basel Committee

Tagging cryptos amongst the riskiest assets a bank could own, the Basel Committee for Banking Supervision (BSI) in 2021 proposed to mandate the lenders to set aside a dollar in capital for every dollar of cryptocurrency they own.

While this may restrict the investments flowing into digital currencies, it does protect from an abrupt wealth washout. However, as of now, any noticeable adoption or advancements to this proposal are rare.