The presents a broad overview of the cryptocurrency space and industry. Targeted at community banks – comprising roughly 94% of all banks in the US – it explains what cryptocurrencies are, and what they can be used for. The article notes that the crypto-sector presents opportunities for community banks to provide services to Bitcoin- and crypto-related businesses, and even mentions that banks could potentially be holding cryptocurrency on their own balance sheets.
While the FRBSF clearly takes cryptocurrencies seriously, the article also emphasizes that the cryptocurrency space as a whole is still very small compared to legacy financial service providers.
The article primarily focuses on the risks involved with cryptocurrencies. In particular, it outlines the risks that come along with the anonymous nature of cryptocurrencies, which it explains make it hard for banks to know and understand the activities of its customers, and the legality thereof.
The FRBSF also indicates that community banks should be cautious if a borrower wants to post Bitcoins or another crypto as collateral for a loan – but does not prohibit it. Lastly, the FRBSF indicates that it expects that cryptocurrencies will not go away, and will possibly even increase their economic footprint over the years.
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