Zhitong Finance learned that American bankers are cautious about cryptocurrencies, even though expectations are that under Trump's leadership, friendlier regulations towards the crypto industry will pave the way for lending institutions to expand into the digital asset space. Bankers stated that Trump has promised to be the 'crypto president' and end the Biden administration's crackdown on the industry to attract cryptocurrency campaign funds, but banks are unlikely to recklessly enter this volatile asset.
Goldman Sachs CEO David Solomon stated, 'The regulatory framework must evolve... Everyone is guessing how the regulatory framework will evolve, but it is still unclear.'
He added that if rules change, Goldman Sachs will 'evaluate' trading in top cryptocurrencies like Bitcoin and Ethereum, 'but for now... our ability to act in these markets is very limited'; he also pointed out that cryptocurrencies are speculative assets.
Robin Vince, CEO of BNY Mellon, stated that BNY Mellon recently started offering cryptocurrency custody services for digital assets held in exchange-traded products, and the bank has also invested in a range of digital asset services. However, he noted that any new initiatives need to have proper safeguards and must withstand several macroeconomic cycles of 'real-world testing'. Vince remarked, 'We have seen several cycles of cryptocurrency. We must observe how some of these assets will evolve.'
Under President Biden's leadership, U.S. bank regulators have made it more difficult for large banks to hold crypto tokens and issued accounting guidance that has made it very costly for banks to offer crypto custody services. With Trump expected to take office, this situation is anticipated to change, as the crypto industry is pushing for a series of ambitious policies to facilitate the widespread adoption of digital assets, including the repeal of the SEC's accounting guidance and urging bank regulators to ease scrutiny on the crypto industry.
In a key step for policy reform, Trump announced last week that he would appoint former PayPal executive and cryptocurrency evangelist David Sacks as the 'crypto czar' of the White House, and nominate pro-crypto Washington lawyer Paul Atkins as the chairman of the U.S. Securities and Exchange Commission. The news of the latter's nomination propelled Bitcoin to break the $100,000 milestone for the first time.
However, Trump has not yet announced his nominations for bank regulators, and Federal Reserve Chief Wall Street Cop Michael Barr is skeptical about cryptocurrencies, stating his term will last until 2026. This brings uncertainty to the pace at which bank regulators can relax crypto lending and trading, especially after last year's turmoil in the crypto industry led to the collapse of lending institutions Silicon Valley Bank and Signature Bank.
Market regulator U.S. Commodity Futures Trading Commission (CFTC) Democratic Commissioner Kristin Johnson expressed that this turmoil, including the collapse of top crypto exchange FTX, may soon be forgotten by policymakers. Johnson stated, 'One of my biggest concerns about any administration is that they forget the lessons we should learn from many past crises.'
Bankers stated that even if regulations are relaxed, any expansion into the crypto space will be driven by customer demand, which remains limited. Bank of America provides some clients with exposure to cryptocurrencies through exchange-traded funds, but the bank's Consumer Investments and Employee Banking and Investment Chief Matt Gellene remarked, 'Interest is not significant.'
Paul Atkins, Senior Vice President and Director of Inclusive Growth Strategy at Bank of America, noted that affluent young professionals are more likely to source investments including digital assets, but Bank of America has also not seen 'huge demand'.
