They could now make markets in almost anything, like oil, wheat or government bonds, aiding sales and purchases of all kinds even as they helped everyday Americans make and receive payments, buy houses and start businesses. When Congress relaxed regulations in 1999 to let commercial banks enter the fray on Wall Street, their power increased again. At every step of the way, they made money. ![]() With the rise of secondary markets for loans, banks could lend even more against the deposits they had by selling the loans to investors after they were made and freeing space on their balance sheets to do more lending. Banks have long helped governments control the flow of money in their local economies by taking deposits, then lending some of that money to other customers. The traditional banking system held sway for centuries. And the Federal Reserve, following in the footsteps of central banks around the world, is evaluating launching its own digital currency. El Salvador recently said it would accept Bitcoin as legal tender. People and businesses around the world are embracing digital currencies at a rapid pace. Cryptocurrency start-ups are beginning to offer credit cards and loans. An alternative financial world is springing up around the traditional banking industry. JPMorgan even started its own digital currency in 2019.Īnd instead of warning regulators away from cryptocurrencies, banking industry representatives now complain that regulators have not acted quickly enough and that their inaction is costing banks valuable time in their mission to compete.īut their initial skepticism has cost them time. Others are weighing trading desks for Bitcoin. Some are offering cryptocurrency investments to their wealthy clients. Their approach is two-pronged: experimenting with cryptocurrency offerings and lobbying regulators to create rules that work in the banks’ favor. Banks want to compete in this new world and profit from it. Now the banking industry is racing to catch up. “Most people agree that in the future - it might be 10 or 20 or years or it might be sooner - effectively all assets are going to be in a digital format,” said Thomas Olsen, a partner at Bain & Company who advises financial firms on cryptocurrencies and other digital asset matters. Globally, 220 million people use cryptocurrencies, according to a July report by. ![]() There are now more than 75 million users of Bitcoin, up from around three million seven years ago, and the number of digital currencies has exploded. New York’s Department of Financial Services began issuing licenses for Bitcoin businesses in 2015. Rodgin Cohen, the finance industry’s pre-eminent lawyer, warned the state’s regulators that the federal government was “very worried” about Bitcoin and its use. At a meeting to discuss violations of Iran sanctions, H. ![]() So they tried to sow doubt.Īt the World Economic Forum in Davos that year, Jamie Dimon, the chief executive of JPMorgan Chase, the nation’s largest bank, called Bitcoin a “terrible” store of value that was also being used for illicit purposes. In 2014, as regulators in New York were exploring ways to control Bitcoin, executives at Wall Street’s biggest banks fretted that regulating cryptocurrencies would also legitimize them - and that could threaten the finance industry.
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