Apr 5, 2022 - Economy & Business

Banks and government edge closer to active role in crypto

Photo: Joy Asico for Axios

Banks and government have a role to play in developing the digital infrastructure and regulatory framework for cryptocurrency or other digital money solutions, financial leaders said Tuesday at the Axios What’s Next Summit in Washington, D.C.

Why it matters: Washington and Wall Street are grappling with whether and how to enable or restrict fintech products that exist in a nebulous space outside the traditional financial system.

  • “There’s a need for plumbing for this to succeed,” Ian Mair, head of U.S. public policy for Blockchain.com, said in a breakout session moderated by Axios reporters Kia Kokalitcheva and Lucinda Shen.
  • “Who buys a house without plumbing? We want regulation. This industry is not going to succeed without regulation.”

The big picture: Traditional banks haven't embraced crypto with open arms.

  • “Technology is great, but it doesn’t always lend itself to solutions that are needed in specific communities,” said John Lewis, president of The Harbor Bank of Maryland.
  • “We recognize that there is a future for it,” Bank of America commercial market executive Liz Shore said, but it’s “a large concern” that crypto is currently lacking significant regulation.

Yes, but: Banks say they expect to play a role — albeit once they're comfortable they won't run afoul of the law.

  • "The bank’s probably going to become your tech company," said Brian Sharp, a senior vice president at Merrill Lynch.

The other side: Crypto advocates say it enables people who have been poorly served by traditional banks to tap into financial growth and empowerment.

  • “I’m part of the whole bankless movement,” said Mike Anderson, CEO of MPAC Crypto. “Unless there’s a huge seismic shift and diversification in how capital is deployed … the bankless economy will be the primary means” by which the economy operates.

Our thought bubble: Crypto moves fast — much faster than regulators.

  • “It’s a feature not a bug that it is a very slow, deliberative process,” Mair said, advocating for a federal solution, rather than a patchwork of different state policies.

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Disclosure: Bank of America is a sponsor of the Axios What's Next Summit.

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