The Roadmap For Banks Adopting Bitcoin

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

In a major announcement yesterday, news broke that U.S. banking regulators are exploring a roadmap for traditional banks to hold bitcoin so that the asset can be used for client trading, as collateral for lending or just to exist on banks’ balance sheets. Even under the guise of increasing regulation, this is clear evidence that traditional banks and their clients are demanding more use of bitcoin which will further accelerate the growing financialization of bitcoin.

“I think that we need to allow banks in this space, while appropriately managing and mitigating risk,” FDIC chair Jelena McWilliams said. “If we don’t bring this activity inside the banks, it is going to develop outside of the banks…The federal regulators won’t be able to regulate it.”

Outside of the traditional banking system, we’ve been seeing the increased level of demand for bitcoin-denominated loans and bitcoin as collateral for both trading and lending. One of the best places to see this action is in the rise of Genesis’s digital asset lending loan portfolio. As of their results in Q2, they have $8.3 billion in active loans outstanding with 42.3% of those loans denominated in bitcoin worth $3.5 billion.

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