Leaders of several major U.S. banks have expressed caution about dealing with cryptocurrencies in testimony released ahead of their scheduled appearances Wednesday before a Senate committee.
Remarks by Brian Moynihan of Bank of America, Jane Fraser of Citigroup and Charles Scharf of Wells Fargo came as U.S. financial regulators struggled to respond to the explosive growth – and dizzying volatility – of a crypto market that currently lacks a general national supervisor.
Financial groups are simultaneously exerting pressure from consumers and businesses who want a share of the stock – and from regulators who have openly lashed out at a business environment that “could benefit from greater investor protection”. in the words of Gary Gensler, chairman of the Securities and Exchange Commission.
Moynihan noted the difficulties for financial executives in his testimony, saying BofA kept a distance from the activities of bitcoin and its siblings even as it continued “to assess the opportunities, risks and demand for customers for cryptocurrency-related products and services ”.
“Currently, we do not lend against cryptocurrencies and we do not do banking business whose primary activity is cryptocurrency or the facilitation of trading and investment in cryptocurrencies,” he said.
Moynihan added that while his bank holds more than 60 patents involving blockchain – the book technology that supports cryptocurrencies – “we haven’t even found a use case for scale.”
Fraser said Citigroup has taken a “measured approach” to how it seeks to “understand changes in the digital asset space and the use of distributed book technology, including demand and interest from our customers,” regulatory developments and technological advances “.
“Before engaging with cryptocurrencies,” he said, “we see it as our responsibility to ensure that we have clear governance and controls.”
Scharf said Wells was close to announcing a pilot project using blockchain technology “to complete internal book transfers of cross-border payments across our global branch network.”
But it was up to him. He said: “We continue to closely and actively monitor developments around cryptocurrencies, which are emerging as alternative investment products, although their currency status and payment mechanism remains fluid.”
The three bankers were to be joined before the Senate banking committee by their other executives Jamie Dimon of JPMorgan Chase, David Solomon of Goldman Sachs and James Gorman of Morgan Stanley.
Led by Sherrod Brown, an Ohio progressive Democrat, the committee convened bankers for its annual oversight hearing on Wall Street businesses.
The panel was particularly interested in the response of large banks to the pandemic and in their efforts to promote diversity in their ranks and social and economic justice more widely.