Two of the largest U.S. banks, Wells Fargo and JPMorgan, registered Bitcoin funds with the Securities and Exchange Commission (SEC) this past week.
The move represents the latest in a growing trend of traditional financial institutions looking for exposure in crypto markets, which, while volatile over their history, have undergone explosive growth. Another major bank, BNY Mellon, recently revealed intentions to establish a team to develop a custodial system.
Bitcoin, of course, is the oldest as probably best understood of all cryptocurrencies.
JPMorgan cautioned investors earlier this year against adding Bitcoin to their portfolios. But now the firm is reportedly working with a well known technology and financial services company, New York Digital Investment Group (NYDIG), on the bitcoin fund.
Wells Fargo is also teaming with NYDIG.
Some believe the fast changing world of banking introduced by DeFi and other developments is causing these leading banks, and other institutions like Goldman Sachs to put money into cryptocurrency companies as a hedge against the prospect of a “bankless” future.
2020 Marked A Change
Some analysts predicted that traditional financial players talking down cryptocurrencies was at least partly a move to suppress enthusiasm while they caught up, working on strategies, platforms and products.
While that might have some truth to it, there’s no doubt that traditional financial institutions have been coming to terms with the fact that cryptos, permissionless blockchains and the dApps built on networks like Ethereum, Solana, Cardano and others, are not a flash in the pan.
And Bitcoin, the oldest crypto, is still king.
Before 2020, banks were restricted from crypto investments. The Office of the Comptroller of the Currency (OCC) had prohibited banks from storing cryptocurrencies. But that changed last July. As a result, banks have been given a green light to experiment with holding cryptos.
Gerald Celente in 2017 predicted that banks would be forced to reconcile with cryptos as a potent new reality:
“JPMorgan Chase CEO Jamie Dimon, like many business-establishment peers who persistently sound the death knell for cryptocurrencies, is wrong.
“As the Trends Research Institute has been forecasting, volatility in digital currencies will continue. Some offerings will crash. But the long-term trend is a crypto, not a fiat-currency-driven, future.
“It’s a new world millennial order; cash is not part of their lives. Digital currencies to them are what gold once was for baby boomers – safe, comfortable and familiar.”
(“Cryptos: Millennial gold,” 4 October 2017)