Cryptocurrency Poses Threat to Bank of America’s Business

Bank of America (BofA) has recognized cryptocurrency as a threat to its business.

In February, BofA announced that it will no longer entertain credit card transactions involving cryptocurrency—a type of digital currency that is mainly used for online transactions. The digital currency is controlled by a technology called blockchain, which can keep track of transactions securely.

As cryptocurrency’s popularity is on the rise, some major banks are already considering to integrate the technology into their systems. In fact, some banks in United Arab Emirates and Saudi Arabia have recently announced their plans to launch a cryptocurrency for transborder transactions.

On the contrary, BofA is not keen on adopting the technology. Because cryptocurrency-based transactions eliminate the need for a middleman, BofA believes that this would limit its control over financial activities and regulations on money laundering. In addition, adopting the technology also entails massive costs in order to keep up with changing industry norms and customer tastes.

According to the bank, customers will also not be permitted to use BofA credit cards to purchase cryptocurrencies.

In December 2017, BofA’s corporate and investment banking division Merrill Lynch banned over 17,000 financial advisers from encouraging clients to invest in Bitcoin—a popular type of cryptocurrency. The ban’s implementation stems from the volatility of Bitcoin’s value. Before 2017 ended, Bitcoin was reportedly traded at over $15,400. However, in February 2018, the cryptocurrency’s value plummeted to over half of the original value. In addition, a Merrill Lynch representative asserted that Bitcoin also poses a risk for investors because the cryptocurrency’s quality standards are still questionable.