PEOPLE | Aug 3, 2021 | WOZINGA NEWS
American Bankers Association new report Encourages Partnership with crypto firms
- The American Bankers’ Association has released a new report recommending that banks consider forming partnerships with crypto businesses.
By Elah Mae Ariate Wozinga Journalist
The American Bankers’ Association (ABA) has released a new report recommending that banks consider forming partnerships with crypto businesses. Because of the rising profitability of the industry and client demand.
American Bankers Association "Regulatory Environment for Crypto"
According to Forbes ABA’s report offers insight on the offering or sale of crypto, money transmission and tax reporting. The offer or sale of a cryptocurrency is only regulated by the SEC if it is considered a security under state or federal law. If it is considered money transmission under state law or conduct that otherwise qualifies the person as a money services business under Federal law.
The report also describes how FinCEN needs registration as a Money Services Business (MSB). Also, how states require Money Transmitter Licenses for money transmission (MTL). The IRS recognizes cryptocurrencies as property for tax purposes.
Possible Crypto Partnerships / Solutions
“Banks are looking for chances to allow their clients access to these assets through their banking relationship.” The report says of banks’ engagement with digital assets. Banks are considering providing access to crypto products due to customer demand.”
According to the study, a poll conducted by institutional crypto trading and custodial business NYDIG. It indicated that 80% of Bitcoin owners would shift their cryptocurrency to a bank.
Based on the report, “with the increasing profitability of the crypto industry, banks have found it more profitable to take crypto companies on as partners and their customers as clients. On the other hand, crypto companies require banks to provide access to the payments system to onboard and offload fiat deposits.”
Payments, where a blockchain-powered payment network might allow for faster and more efficient cross-border transactions. Also, lending, where blockchain technology could allow for cheaper and more secure lending operations. These are two examples of suggested partnerships. Other activities include KYC/AML, digital identity, reporting, and also banking, in which a bank may provide business banking services to cryptocurrency companies.