While some banking industry players, like the head of JP Morgan, continue to criticize Bitcoin while using its technologies, a growing number of financial institutions are expressing interest in the first of the crypto-assets. Major US banking associations are petitioning the Securities and Exchange Commission (SEC) to allow banks to benefit from the financial advantages offered by Bitcoin cash ETFs.
This turnaround among bankers is spectacular. Despite the reluctance of some to recognize the potential of Bitcoin and cryptocurrencies, many of them now aspire to carve out a share of this promising market.
In an unprecedented move, a group of bankers have sent a letter to SEC Chairman Gary Gensler, known for his critical stance towards cryptocurrencies. Four associations of American bankers and financiers are involved in this initiative:
They are expressing the same wish to the SEC: to allow their institutions to manage bitcoin custody for the 11 recently approved cash ETFs.
Bankers are highlighting what they see as an injustice: the impossibility of being a custodian of bitcoins, a resource increasingly coveted by exchange-traded funds.
They are asking the SEC to review Staff Accounting Bulletin 121 (SAB 121), a regulation that prevents them from holding significant amounts of bitcoin and other cryptocurrencies.
"The [Securities] Commission recently approved 11 Bitcoin cash ETFs, allowing investors to access this asset class through a regulated product. However, banking organizations that serve as asset custodians, a role they regularly play for most other ETFs, are notably absent from these approved products. These ETFs have already recorded billions of dollars in inflows, but it is virtually impossible for banks to serve as custodians for these large-scale ETFs (...)".
Asset management giants such as BlackRock and Fidelity were quick to identify the opportunity represented by Bitcoin ETFs. Banks, once skeptical or even critical of Bitcoin, are now looking to exploit the potential of cryptocurrencies, citing the SEC's recently adopted regulation. But at the end of the day, it's probably the more than $4 billion accumulated in BTC in just one month that is fuelling their greed.
