Reuters Next: US bankers cautious on crypto despite expected regulatory easing

Signature Bank

12/12/2024 11:00

(Repeats story first published on Wednesday.)

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      Bankers cautious despite Trump's pro-crypto stance
    

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      Goldman Sachs says rules limit banks' crypto market
participation
    

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      Client demand for crypto remains limited, bankers say
    

  
       NEW YORK, Dec 11 (Reuters) - U.S. bankers struck a
cautious tone on cryptocurrencies at the Reuters NEXT conference
in New York this week, despite expectations that friendlier
rules under President-elect Donald Trump will pave the way for
lenders to expand into digital assets.
Trump courted crypto campaign dollars with promises to be a
"crypto president" and end the Biden administration's crackdown
on the sector, but banks are nevertheless unlikely to rush
head-first into the volatile asset, bankers said. 
    "The regulatory framework has to evolve ... and everyone's
speculating as to how that regulatory framework will evolve, but
it's still unclear," said Goldman Sachs  GS.N  Chief Executive
David Solomon.
    If the rules change, the Wall Street giant would "evaluate"
dealing in top cryptocurrencies like bitcoin and ethereum, he
said. "But for the moment ... our ability to act in these
markets is extremely limited," he added, noting cryptocurrencies
were speculative assets.
    BNY  BK.N  recently began offering custody of
cryptocurrencies held by exchange-traded products, and the bank
is also investing in a range of digital asset services, its CEO,
Robin Vince, said. But anything new needs to be done with
appropriate guard rails and be "battle-tested" through a few
macroeconomic cycles, he said. 
    "We've seen a couple of cycles already in crypto. We'll have
to see how some of these assets evolve," he added. 
Under President Joe Biden, bank regulators made it more
difficult for big lenders to hold crypto tokens and issued
accounting guidance which made it extremely costly for banks to
offer crypto custody services. 
With Trump in the White House, that is expected to change and
the crypto industry is pushing for an ambitious raft of policies
that would promote the widespread adoption of digital assets,
including rescinding the SEC accounting guidance and asking bank
regulators to ease up on scrutiny of the crypto sector.
In key steps toward that policy overhaul, Trump last week
announced he would make former top PayPal  PYPL.O  executive and
crypto evangelist David Sacks the White House "Crypto Czar" and
would nominate pro-crypto Washington attorney Paul Atkins as SEC
chair. The latter announcement pushed bitcoin past the $100,000
milestone for the first time.  
But Trump has not yet announced his banking regulators, while
the Federal Reserve's top Wall Street cop, Michael Barr, who has
struck a skeptical tone on crypto, has said he will serve out
his term through 2026. That creates uncertainty over how fast
bank regulators may ease up on crypto lending and dealing,
especially after turmoil in the crypto sector contributed to the
collapse of lenders Silvergate and Signature Bank last year. 
That turmoil included the implosion of top crypto exchange FTX,
a crisis that policymakers are in danger of forgetting all too
quickly, Kristin Johnson, a Democratic commissioner at markets
watchdog the Commodity Futures Trading Commission, told the
Reuters NEXT audience.
    "One of my biggest fears for any administration is that they
forget the lessons that we were meant to have learned from many
previous crises," Johnson said. 
    Even with regulatory easing, any expansion into crypto will
be driven by client demand, which remains limited, bankers
said. 
    Bank of America  BAC.N  offers some clients exposure to
cryptocurrencies via exchange-traded funds, but there was "not
an overwhelmingly large amount of interest," said Matt Gellene,
the bank's head of Consumer Investments and Employee Banking &
Investments.
    Affluent young professionals were more likely to shop around
for investment options that might include digital assets, said
US Bank  USB.N  Senior Vice President and Director of Inclusive
Growth Strategy Akita Somani, but US Bank was likewise not
seeing "significant demand." 

(Writing by Michelle Price; Reporting by Nupur Anand, Tatiana
Bautzer, Lananh Nguyen, Davide Barbuscia, Laura Matthews, Isla
Binnie and Shashwat Awasthi in New York, and Manya Saini in
Bangalore; Editing by Matthew Lewis)
((mailto:michelle.price@thomsonreuters.com; +12026041711;
Twitter: @michelleprice36;))