Bank of America has cited cryptocurrency as a material risk to its business, public records show.
The technology could hamper the second-largest U.S. bank’s ability to comply with anti-money-laundering regulations, pose a competitive threat and force the company to spend more money to keep up with the times, the bank said in its annual filing with the Securities and Exchange Commission.
“Cryptocurrency” is mentioned three times in the annual report, all in the section on risk factors.
The first reference is in the discussion of AML, know-your-customer, sanctions and foreign corrupt practices laws in the U.S.
“Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds,” the filing says, explaining further:
“Our ability to comply with these laws is dependent on our ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability.”
Yet perhaps more notable is the acknowledgement that cryptocurrency poses competitive risks to the bank.
In a passage about new competitors in the financial services industry, Bank of America expressed caution about how client preferences could lead them to use products like cryptocurrencies – for which, as it stands, the bank does not offer any support.
Bank of America notes in the filing:
“Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”
Indeed, the mention of cryptocurrency as an outside risk is taken one step further, with Bank of America stating that rising adoption would result in it having to dedicate more resources – that is, spending money – to stay competitive.
“[T]he widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services,” the bank said.
Bank of America is one of several U.S. banks that recently banned credit card purchases of cryptocurrency. The bank did not restrict crypto purchases using debit cards, however.
Image via Shutterstock