James Cirrone

Bank of America and Fidelity have been significant owners of MicroStrategy shares in recent months, suggesting continued institutional interest in indirect bitcoin exposures.



Bitcoin volatility has tapered off in recent weeks as crypto traders <a href="https://blockworks.co/news/bitcoin-implied-volatility-q1-price-rally">weigh the asset’s substantial bounceback in 2023</a> from last year’s lows.&nbsp;&nbsp;



Bank of America in a recent SEC disclosure was showing 86,147 MicroStrategy (MSTR) shares owned by one or more of the bank&#8217;s investment entities. Banks typically purchase stocks in these cases on behalf of clients and investors in active or passive strategies run out of an asset management arm



Fidelity, according to an SEC filing tracking stock purchases through year end 2022, snapped up 97,199 MSTR shares.



Both regulatory filings are not necessarily indicative of overall holdings for either company.  



Shares of MicroStrategy (MSTR) have closely tracked the price of Bitcoin since the company began holding the digital currency as a reserve on its balance sheet. And scores of traders still view the stock as one of the closest publicly traded proxies for spot bitcoin exposures.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1207" height="512" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=1024&amp;h=1024" alt="" class="wp-image-51621" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=1207 1207w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/BTC-vs-MSTR-2-year.png?w=80 80w" sizes="auto, (max-width: 1207px) 100vw, 1207px" /><figcaption class="wp-element-caption">BTC vs MSTR 2 year / Yahoo Finance</figcaption></figure>



Youwei Yang, chief economist at Bit Mining, told Blockworks in an interview that MicroStrategy continues to be known as the “top choice” for obtaining indirect bitcoin exposure via public and regulated markets.&nbsp;



Plus, bitcoin has been on the upswing for the last three to four months, Yang said, making it a no-brainer for traders to hop on MicroStrategy shares and other bitcoin exposed assets.&nbsp;



“Starting [in] early January, the coins have been climbing quite a bit and it’s [natural] for a trader, whether small or large, to jump in to [buy] any exposure related to crypto or bitcoin,” Yang said.



The SEC disclosures come as MicroStrategy has continued its long time corporate strategy of adding more and more bitcoin to its portfolio. Founder <a href="https://blockworks.co/news/microstrategy-adds-btc-to-coffers">Michael Saylor’s business intelligence company owned</a> 140,000 bitcoins (<a href="https://blockworks.co/price/btc">BTC</a>) through April 4.&nbsp;&nbsp;



MicroStrategy has maintained its accumulation even as crypto markets have been rattled by escalating US enforcement actions by the <a href="https://blockworks.co/tag/sec">SEC</a> and the <a href="https://blockworks.co/tag/cftc">CFTC</a>. Saylor last year stepped down from his chief executive seat and <a href="https://blockworks.co/news/bitcoin-michael-saylor-tax-evasion-lawsuit">has since been accused of tax evasion</a>.&nbsp;



The US publicly traded company hasn’t been deterred — despite <a href="https://blockworks.co/news/bitcoin-hungry-microstrategy-posts-250m-net-loss-in-q4">posting a net loss of $250 million in the fourth quarter</a> on its BTC holdings.



On a fourth quarter earnings call in February, MicroStrategy Chief Financial Officer Andrew Kang said that “our corporate strategy and conviction in acquiring, holding and growing our bitcoin position for the long term remains unchanged.”&nbsp;



Industry participants, including crypto hedge funds and family offices, have been eyeing MicroStrategy’s latest market moves as traders parse unsteady macro conditions.  



Updated April 12, 2023 at 6:59 pm ET: Corrects the disclosed duration of Fidelity&#8217;s MicroStrategy stocks holdings to year end 2022. Also clarifies general SEC stock disclosure practices. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">MicroStrategy or <a href="https://twitter.com/search?q=%24MSTR&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$MSTR</a> is the only public company in the world has successfully accumulated 140,000 <a href="https://twitter.com/hashtag/bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#bitcoin</a> in less than three years. Congrats <a href="https://twitter.com/saylor?ref_src=twsrc%5Etfw">@saylor</a>! Your conviction will pay well in the future.&mdash; Louis (@louishliu) <a href="https://twitter.com/louishliu/status/1643705094976987136?ref_src=twsrc%5Etfw">April 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Fidelity, Bank of America’s Indirect Exposure to Bitcoin Through MicroStrategy

Ben Strack

<div id="highlights-block_62547eedcf888" class="highlights">
 <ul>
 <li>Michael Roberts will lead Copper’s new prime infrastructure team</li>
 <li>The appointments come after Copper hired a chief operating officer and chief legal officer last month</li>
 </ul>
 
</div>



Digital asset custodian Copper has hired five former Bank of America Merrill Lynch employees to lead the expansion of its prime infrastructure offerings. 



The appointees include Michael Roberts, Adam Groom, Paul Barham, Ben Carr and Ross Budgen, the company announced Monday. The new additions will report to Copper Chief Revenue Officer Boris Bohrer-Bilowitzki.



Roberts spent 16 years at Bank of America, according to his LinkedIn profile, most recently as a managing director and head of the bank’s prime platform for Europe, the Middle East and Africa (EMEA). He is now set to lead the new prime infrastructure team.



“I have watched Copper from afar for some years now and been continuously impressed at the speed and quality of the solutions they bring to market,” Roberts said in a statement. “Boris and the team understand the technology institutional investors want and need to pursue crypto strategies.”



Groom and Barham, who led relationship management and product development, respectively, for Bank of America Merrill Lynch’s prime platform in EMEA, join Roberts on the Copper team.&nbsp;



Carr and Budgen add expertise in product development, account management and analytics.



The ex-Bank of America Merrill Lynch members will help build Copper’s prime infrastructure offering with custody, collateral management and hedging services, a firm spokesperson told Blockworks in an email.&nbsp;



Founded in 2018, Copper offers custody, trading and settlement solutions for institutional investors across 450 cryptoassets and roughly 45 exchanges.



The planned expansion comes as more prime brokers join the Copper ecosystem and its ClearLoop network, according to the company. Launched in 2020, ClearLoop removes the need for institutional investors to transfer digital assets onto an exchange before being able to trade and includes collateral management for crypto derivatives.



The latest appointments come shortly after <a href="https://cms.blockworks.co/latest-in-crypto-hiring-ftx-adds-gaming-partnerships-lead/" target="_blank" rel="noreferrer noopener">the company named</a> Sabrina Wilson as its chief operating officer and Carly Nuzbach Lowery as chief legal officer last month.  



Wilson was most recently global co-head of Citi’s futures, over-the-counter clearing and foreign exchange prime brokerage business. She has also served in various roles at Goldman Sachs, JPMorgan and Deutsche Bank.



Nuzbach Lowery joined Copper from Coinbase, where she was associate general counsel in London. Prior to that, she was senior legal counsel at Uber and Barclays.&nbsp;



The move is part of <a href="https://cms.blockworks.co/?s=gone+crypto" target="_blank" rel="noreferrer noopener">a larger migration</a> of talent from traditional finance to crypto. 



“While we have seen a couple of folks make this move, it appears to us — at the moment, at least — far from a trend,” Lawrence Lieberman, senior managing director at recruiting company The Orion Group, told Blockworks. “We have certainly had more crypto-related conversations than expected over the past few months. [There’s] lots of intrigue, but still enough uncertainty to make this a move only for the real risk-takers.”



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Copper Hires Five Former Staff From Bank of America

Jacquelyn Melinek

<div id="highlights-block_621557c086517" class="highlights">
 <ul>
 <li>Rod Bolger has over 25 years of experience in traditional financial institutions from other industry players like Bank of America, Citigroup and PwC</li>
 <li>Celsius has over $8.2 billion in loans processed, over $18.9 billion in assets and about two million community members as of Feb. 18</li>
 </ul>
 
</div>



Cryptocurrency lender Celsius has tapped a Royal Bank of Canada alum as its new chief financial officer, the company’s CEO Alex Mashinsky told Blockworks.



Rod Bolger previously held the same title at the Canadian bank, one of the country’s largest. He has over 25 years of experience in traditional finance, with resume stints including Bank of America, Citigroup and PwC.



<div class="wp-block-image"><figure class="alignright size-full"><img loading="lazy" decoding="async" width="300" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg" alt="" class="wp-image-17763" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=50 50w" sizes="auto, (max-width: 300px) 100vw, 300px" /><figcaption>Rod Bolger, Celsius CFO | Source: Celsius</figcaption></figure></div>



Bolger replaces Celsius’ Interim CFO Roni Cohen-Pavon, who will remain in his role as the company’s chief revenue officer. Cohen-Pavon stepped in after former CFO Yaron Shalem was suspended last year following his arrest in Israel on suspicion of money laundering, Blockworks <a href="https://cms.blockworks.co/celsius-suspends-cfo-due-to-external-fraud-sexual-assault-investigation/" target="_blank" rel="noreferrer noopener">reported</a>.



Mashinsky told Blockworks that Shalem has since been dismissed.



“[Shalem] was questioned by the police in relation to a matter that happened before he joined Celsius, so we suspended him. And since then, he’s no longer with the company,” Mashinsky said. “It’s not a good situation, but nothing he did had to do with Celsius, so there was no money missing or wrongdoing that occured at Celsius.”



Bolger is tasked with implementing controls to protect client assets and help the company expand globally.



&#8220;I am thrilled for the opportunity to join such a fast growing mission-based company such as Celsius,&#8221; Bolger said in a statement. “I feel fortunate to be able to bring my traditional finance and banking experience to help grow this visionary global company.&#8221;



This move adds to the ongoing trend of talent migrating from other industries, mainly finance, into crypto. This shift has been building for years and is expected to continue to accelerate, Blockworks <a href="https://cms.blockworks.co/the-upside-is-huge-tradfi-talent-flocks-to-crypto/" target="_blank" rel="noreferrer noopener">reported</a>.



Bolger made over $4 million at RBC, according to <a href="https://www.erieri.com/executive/salary/rod-bolger-akvo" target="_blank" rel="noreferrer noopener">data</a> by the Economic Research Institute. He left the bank in September 2021 after five years. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The fact that he wanted to jump into crypto is phenomenal,” Mashinsky said. It’s rare that high-paid executives at banks leave for crypto companies, but Bolger did, which speaks volumes to the crypto industry’s ability to attract talent, Mashinsky added. </blockquote>



“There are CFOs who do number-crunching, and there are CFOs who love creating businesses and, [Bolger] is doing the latter,” he said.



Celsius has over $8.2 billion in loans processed, over $18.9 billion in assets and about two million community members, as of Feb. 18, its website <a href="https://celsius.network/about-us" target="_blank" rel="noreferrer noopener">stated</a>. In November, the company expanded its Series B funding round from $400 million to an oversubscribed <a href="https://cms.blockworks.co/?s=celsius#:~:text=Celsius%20Expands%20its%20Series%20B%20From%20%24400M%20to%20Oversubscribed%20%24750M" target="_blank" rel="noreferrer noopener">$750 million</a>, marking one of the largest funding rounds in crypto history.



Celsius hopes that it can continue to “build that bridge from TradFi to crypto” alongside other crypto-focused companies by bringing in talent from both traditional finance and crypto, Mashinsky commented.



“We don’t want to take the worst habits from Wall Street, we want to bring the best ideas that help crypto…there are trillions of dollars [in traditional finance] that need to cross that bridge, and that’s what is at stake,” Mashinsky said.



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Celsius Recruits Royal Bank of Canada Vet as CFO After Arrest of Predecessor

<div id="highlights-block_61d7473325b44" class="highlights">
 <ul>
 <li>Bank of America projects Coinbase’s subscription and services revenue to reach 16% in 2023, compared to 4% of total revenue in 2020</li>
 <li>User-created metaverses will be the future of social networks, Coinbase Chief Product Officer Surojit Chatterjee wrote in a Dec. 30 blog post</li>
 </ul>
 
</div>



Bank of America has changed Coinbase’s rating from neutral to buy due to the company’s increasing signs of revenue diversification beyond retail crypto trading.



Jason Kupferberg, a research analyst at the bank, said in a research note that he expects the company’s revenue diversification trend to accelerate in 2022 and beyond. He maintained its price target at $340.



Coinbase’s subscription and services revenue was 12% of its total net revenue in the third quarter of 2021, which was up from 4% in 2020, Kupferberg wrote. Bank of America expects that number to rise to 16% by next year, he added.&nbsp;&nbsp;



Staking, NFT and decentralized finance (DeFi) products will be among the offerings driving Coinbase’s revenue diversification trend, Kupferberg wrote.



Coinbase <a href="https://cms.blockworks.co/coinbase-plans-to-launch-nft-marketplace/" target="_blank" rel="noreferrer noopener">revealed in October</a> that it would launch an NFT marketplace allowing users to purchase, mint, showcase and discover the crypto assets. Kupferberg said that the offering is expected to launch this year.



NFTs will become the next evolution of users’ digital identity and passport to the metaverse, Coinbase Chief Product Officer Surojit Chatterjee wrote in <a href="https://blog.coinbase.com/10-predictions-for-web3-and-the-cryptoeconomy-for-2022-745a20a60cd0" target="_blank" rel="noreferrer noopener">a Dec. 30 blog post</a>.&nbsp;



“Users will come together in small and diverse communities based on types of NFTs they own,” Chatterjee wrote. “User created metaverses will be the future of social networks and will start threatening the advertising driven centralized versions of social networks of today.”



Coinbase also began allowing customers last month <a href="https://blog.coinbase.com/coinbase-makes-it-easy-to-earn-yield-with-defi-bd38156e2715" target="_blank" rel="noreferrer noopener">to earn DeFi yield</a> on Dai, a stablecoin designed to be pegged to the US Dollar.



“In our view, scaling of these non-trading revenue streams could also catalyze increased interest in the stock among institutional investors,” Kupferberg explained. “While uncertainty around regulation remains an ongoing potential risk, we continue to believe that COIN&#8217;s technology, innovation and brand are positive differentiators as more consumers and institutions engage with various parts of the crypto/digital asset ecosystem.”



Crypto is on pace to hit a billion users in the next five years, Coinbase President and Chief Operations Officer Emilie Choi <a href="https://cms.blockworks.co/coinbase-president-crypto-on-pace-for-1-billion-users-within-5-years/" target="_blank" rel="noreferrer noopener">said last month</a> during a webinar at the Bloomberg Financial Innovation Summit.



Choi added that Coinbase would look to buy “incredible companies” that it sees in the crypto space.



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Bank of America: Coinbase Revenue Diversification to Accelerate in 2022 and Beyond

Casey Wagner

<div id="highlights-block_618bbf03756c4" class="highlights">
 <ul>
 <li>Anchorage Digital has hired a traditional finance veteran to lead its sales team</li>
 <li>The platform is looking to expand its prime brokerage offerings as institutional demand picks up</li>
 </ul>
 
</div>



Camilla Churcher spent 18 years in the traditional finance world, working in sales and prime derivatives services at Bank of America, Credit Suisse, Citigroup and Morgan Stanley before moving into the digital asset space, and now <a href="https://www.anchorage.com/" target="_blank" rel="noreferrer noopener">Anchorage Digital</a>. It was a move that surprised many of her colleagues, she said.&nbsp;



“There was a healthy amount of skepticism when I made the transition,” Churcher said. “There were a handful of people that were excited for me, but broadly, at the time, people were not familiar with what was happening in digital assets.”&nbsp;



Churcher started her cryptocurrency career in 2018 at startup LGO, a trading platform which was eventually acquired by Voyager.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It was very clear to me that the technology was going to be completely transformative for the industry, and I wanted to be a part of that,” she said. “So I took the jump.”&nbsp;</blockquote>



After LGO, Churcher spent time at Celsius. It was Anchorage’s prime brokerage offerings that eventually drew her to the platform.&nbsp;



“I was very excited to have the chance to join Anchorage, as I think it&#8217;s really a preeminent platform and probably, the leading platform that can actually deliver a real prime brokerage offering in the space,” she said.&nbsp;



Churcher’s experience with traditional financial markets will be essential in expanding Anchorage’s prime brokerage and custody services, the company said.&nbsp;



“Camilla will help our sales team understand our clients holistically, serve as trusted advisors, and help institutions interested in digital assets understand the significance of Anchorage’s secure custody solution as the infrastructure basis for secure, accessible digital asset solutions,” Diogo Monica, co-founder and president of <a href="https://cms.blockworks.co/?s=anchorage" target="_blank" rel="noreferrer noopener">Anchorage</a> said.&nbsp;



Prime brokerage services mostly focus around custody, Churcher said, but customers are also looking for execution, financing, staking and governance. A full suite of services is what is going to bring institutional players to the space.&nbsp;



“That is going to be an important bridge for traditional finance,” she said.



<hr class="wp-block-separator">
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<hr class="wp-block-separator">

Anchorage Hires Bank of America, Celsius Alum as Head of Sales

<div id="highlights-block_618440d3bbc9f" class="highlights">
 <ul>
 <li>Montag said he doesn’t view the crypto industry as a competitor to banks, but rather another asset class some people see value in</li>
 <li>Bank considering its involvement in the crypto space from lens of a fiduciary with $3 trillion of assets under management, COO explains</li>
 </ul>
 
</div>



As Bank of America has begun looking more into the crypto space, the bank’s chief operating officer said he believes certain characteristics of the blockchain and crypto could add a lot of value to banks.



“I believe some of the things that are happening today will provide that technological jump that allows banks to be more efficient, [have] less errors, be more compliant,” Bank of America COO Tom Montag said about crypto during a Chainalysis event on Thursday in New York City. “So we look forward to figuring out a way to use it best and have it be part of the system.”



Bank of America officially launched its cryptocurrency research division last month, led by Alkesh Shah, the bank’s head of global cryptocurrency and digital asset strategy.



The company released a report, called <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/10/bofa-global-research-launches-coverage-of-digital-assets.html" target="_blank" rel="noreferrer noopener">Digital Assets Primer: Only the first inning</a>, in conjunction with the launch. It notes that 221 million people have purchased or sold a cryptocurrency as of June 2021, up from 66 million in May 2020.



“It’s difficult to overstate how transformative blockchain technology, digital assets and the thousands of decentralized apps that have yet to be created could potentially be,” the report states.



Keep reading for some takeaways from Montag’s latest comments.



<h3 class="wp-block-heading">Lending against crypto assets a possibility</h3>



When asked by Chainalysis CEO Michael Gronager about crypto companies and protocols offering loans against crypto assets, Montag said he believes “there’s certain things that probably need to happen” before Bank of America could enter that space.&nbsp;



The COO explained that the bank currently lends against art, houses, boats and even railroad cars. He noted that if the crypto market shows more stability and less volatility, the bank could consider that in the future.



“Even in stocks, people can lose a lot of money lending money against stocks…so you can see why people get nervous about what exactly they’re lending against and how do they make sure they have it?”



<h3 class="wp-block-heading">Stablecoins need to prove stability</h3>



When asked about stablecoins, Montag noted the failure of Argentina basing their currency on the dollar.



By pegging its exchange rate to the US dollar in 1991, Argentina ended hyperinflation, reducing inflation rates to single-digit levels, according to a 2002 economic research letter published by the Federal Reserve Bank of San Francisco. In January 2002, it abandoned its peg to the dollar. Interest rates subsequently continued to rise and the currency depreciated 356% against the US dollar through Sept. 20 of that year.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“If the Fed had a stablecoin, you’d be pretty comfortable; if someone else had a stablecoin you’d be less comfortable,” he said. “If it’s stable and it’s better and people feel comfortable with it, it would be good for the economy, banks, everybody. But that’s what I would be worried about — is it really a stable coin?”</blockquote>



The executive added that he believes a central bank digital currency (CBDC) is “inevitable,” noting that he expects the increasingly digital financial system will be able to handle a CBDC well.



<h3 class="wp-block-heading">Crypto market and banks are not competitors</h3>



Montag said he doesn’t view the crypto industry to be competing with banks. Rather, he said, he considers crypto to be another asset class that a portion of people like for a variety of reasons.



“I came around to the view that this could really have value and understood why it would have value to people,” he explained. “The global store of value concept and the global movement made sense to me.”



Of the roughly 180 currencies in the world, Montag said there are plenty that many people would not want their money in, adding that moving money across borders can be expensive. Some of the benefits of cryptocurrencies might not be as relevant to Americans, who have a more stable currency, the COO added.



“I can see why there’s an element of people that like it and want to use it and [have] that hope for stability,” Montag said. “We don’t know how stable any of the coins are.”



<h3 class="wp-block-heading">Where to go from here?&nbsp;</h3>



In addition to Bank of America’s newly launched crypto research effort, the company currently facilitates transactions on bitcoin futures. The strategic direction around what form the bank could further delve into the space and the timeline for that remains to be seen.



“We’re certainly aware of wallets like Venmo or Square or Robinhood and what’s going on in that space and what’s going on in crypto,” Montag said. “We have $3 trillion of assets under management so we’re thinking responsibly about what we need to do and what we should offer to our clients and how we should do it.”



A key for more mainstream acceptance of crypto will be getting consistency around the process and rules around it,” the executive noted.



“It will be interesting to figure out, is it really part of a portfolio somebody should have or not?” Montag said. “…We really do have a fiduciary responsibility on those kind of things, and where that goes is determined a lot by the asset itself and how much support and what happens around it.”

Bank of America COO: Crypto Could Add Value to Banks

Sam Martin

<div id="highlights-block_615cb54cf8107" class="highlights">
 <ul>
 <li>Bank of America (BoA) kicked off its digital asset research division with an in-depth report titled ‘Digital Assets Primer: Only the first inning’ led by Alkesh Shah</li>
 <li>While BoA believes Bitcoin is important, they think that the digital asset ecosystem as a whole has the chance to disrupt finance, technology, supply chains, social media, gaming, and more</li>
 </ul>
 
</div>



Bank of America officially launched its cryptocurrency research division with a new 140-page report titled, “<a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/10/bofa-global-research-launches-coverage-of-digital-assets.html" target="_blank" rel="noreferrer noopener">Digital Assets Primer: Only the first inning</a>,’ that covers bitcoin, NFTs, DeFi, central bank digital currencies (CBDCs) and more.&nbsp;



Led by Alkesh Shah, head of global cryptocurrency and digital asset strategy, the report reveals that 221 million people have purchased or sold a cryptocurrency as of June 2021, up from 66 million in May 2020.



“It’s difficult to overstate how transformative blockchain technology, digital assets and the thousands of decentralized apps that have yet to be created could potentially be,” the report states.



<h3 class="wp-block-heading">Going beyond bitcoin</h3>



Up until today, Bank of America’s attention was primarily focused on bitcoin and <a href="https://cms.blockworks.co/bank-of-america-reportedly-to-offer-bitcoin-futures-trading/" target="_blank" rel="noreferrer noopener">bitcoin futures trading</a>. However, its new report suggests that the bank is looking into all aspects of the digital assets industry. “Digital assets that enable a platform to be built, like the Apple iPhone did for applications, are gaining the most value; the top three: ether (365% ytd to $403bn value), cardano (1427% ytd to $89bn value) and binance coin (1142% ytd to $78bn value)”.



The report also cites the increasing relevance of stablecoins and the potential of CBDCs. The top six stablecoins by market capitalization have reached a combined value of $115 billion and settled $2.8 trillion of transactions in the first half of 2021, according to the report.&nbsp;



The worry amongst policy makers is that private stablecoins could create systemic risk if there were ever a ‘bank run’ type situation, according to the report. It would force the issuers to liquidate their collateral and cause contagion effects in traditional financial markets. Some issuers — <a href="https://cms.blockworks.co/more-capital-flowed-into-stablecoins-than-muni-bonds-in-2021/" target="_blank" rel="noreferrer noopener">notably Tether Limited</a> — hold commercial paper in order to generate a yield on reserves, and if they grew too large, sudden redemption demand might prompt them to try to liquidate their commercial paper holdings, which could have massive ramifications in the corporate bond market.



<h3 class="wp-block-heading">CBDCs: When, not if</h3>



According to the report, the bank believes that CBDCs are a question of “when”, not “if”.



Governments and regulators globally have stepped up efforts to limit usage of digital assets, as adoption and use have increased. Some of the key issues that governments and regulators appear to be focused on revolve around AML/KYC, mitigating potential bank runs, taxation and liability. A central bank-issued/managed CBDC would address these issues, while maintaining central bank monetary policy control” according to the report.



Bank of America has also kept their eye on non-fungible tokens (NFTs). While they do credit the current methods of utilization for art and gaming in the research piece, they also recognize other potential use-cases. “NFTs can be used instead of deeds, titles or anything currently needed to demonstrate ownership — and all without a middleman charging a fee,” the company report stated.



Referring to the focus on NFTs in the report, Anto Paroian, chief operating officer at crypto/digital assets hedge fund ARK36, said, “The most interesting thing to note is that the [report] explicitly mentions NFTs as one of the current drivers of the digital asset market.” He continued:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Although there are many voices dismissive of the NFT ecosystem as just another bubble, non-fungible tokens are already a massive economy. Bank of America seems to be well aware that NFT’s disruptive potential will spill over to other industries and extend well beyond this current bull market.”</blockquote>



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh6.googleusercontent.com/K_BV22Rlgrnng9jgeBvHQwf53-oQnYCx5v6e64KwXUKWpTA3gZ0KtWW5MRCKwoaD91SuhnAXkaPSymL7nWrw_kKnFc_tUVCgFanWSOGRkbcYr8fhKXFZ9Xb5_t9viqlOnRwYTTf0=s0" alt=""/><figcaption>&nbsp; Source: Dune Analytics &#8211; @rchen8</figcaption></figure></div>



<h3 class="wp-block-heading">The DeFi threat</h3>



Perhaps the greatest threat to Bank of America’s business model is decentralized finance (DeFi), where users can carry out many of the functions of a traditional bank such as borrowing, lending, earning attractive yields and many other activities.&nbsp;



Contrary to expectations of apprehension toward embracing DeFi, the report sounds optomistic about its future: 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The SEC is investigating DeFi applications and companies to determine if and how they should bring them into the current regulatory framework. We are optimistic about the long-term growth of this segment as it matures and regulatory uncertainty is clarified.”</blockquote>



Throughout the report, Bank of America stresses that the main headwind for growth in the near-term is regulatory risk. But they also state that in the long-run, clarity from regulators will allow new entrants to participate in the emerging asset class.



<hr class="wp-block-separator">
Are you a UK or EU reader that can’t get enough investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.
<hr class="wp-block-separator">

Bank of America is Bullish on Digital Assets; Believes Bitcoin is Only the Beginning

<div id="highlights-block_60f1caa63e4c9" class="highlights">
 
</div>


<div id="highlights-block_60f1caa93e4ca" class="highlights">
 <ul>
 <li>Report comes a week after bank set out plans to begin research coverage of cryptocurrencies and digital assets</li>
 <li>Bank of America will allow bitcoin futures through CME Group, which are cash-settled contracts based on the CME CF Bitcoin Reference Rate</li>
 </ul>
 
</div>



Bank of America is reportedly set to allow certain clients to trade bitcoin futures, a move that would represent another step into the crypto realm for the financial services stalwart.



The Charlotte, North Carolina-based bank will be using bitcoin futures through CME Group, Coindesk reported Friday. CME’s Bitcoin futures contract is a USD cash-settled contract based on the CME CF Bitcoin Reference Rate (BRR), which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin.



The futures that Bank of America is clearing don’t actually involve transacting in bitcoin.&nbsp;



A spokesperson for the bank declined to comment.&nbsp;



David Tawil, president of ProChain Capital, told Blockworks that the move shows that Bank of America is trying to keep pace with Goldman Sachs, which last month named Galaxy Digital the liquidity provider <a href="https://cms.blockworks.co/goldman-sachs-teams-with-galaxy-to-meet-institutional-digital-asset-demand/">for its bitcoin futures block trades</a> through CME Group.&nbsp;



The month prior, Goldman had <a href="https://cms.blockworks.co/goldman-sachs-doubles-down-on-crypto-with-derivatives-trading-team/">announced a digital assets strategy</a> that involves offering bitcoin derivatives to clients and opening a dedicated trading desk for cryptocurrency.&nbsp;



The news comes about a week after Bank of America planned to begin research coverage of cryptocurrencies and digital assets, according to an internal memo obtained by Blockworks. Candace Browning, the firm’s global head of research, called the space “one of the fastest-growing emerging technology ecosystems” in the note to colleagues.&nbsp;



Tawil said he doesn’t expect Bank of America to be a leader among its peers, adding that from the bank’s perspective, there is too much to lose and not yet enough to gain in the space.



“I expect that traditional Wall Street will try to get creative on how to benefit from crypto without diving in head-first,” he said. “It’s more likely that they will be forced [rather] than take the initiative.” Sean Horgan, an equity research analyst at Rosenblatt Securities, <a href="https://cms.blockworks.co/mizuho-securities-digital-wallets-poised-to-disrupt-traditional-banks-over-next-decade/">recently told Blockworks</a> that he believes digital wallets as a group are going to disrupt traditional banks over the next five to 10 years. Such competitors to the incumbent institutions include Square, which Mizuho Securities Senior Analyst Dan Dolev wrote in a July 15 research note could become “the money center bank of the future.”

Bank of America Reportedly to Allow Bitcoin Futures Trading

<div id="highlights-block_60e7541374253" class="highlights">
 <ul>
 <li>Former head of firm’s global technology specialist team selected to lead the new initiative</li>
 <li>Expansion comes a month after custody bank State Street launched a new division focused on the shift to digital finance</li>
 </ul>
 
</div>



Bank of America is set to begin research coverage of cryptocurrency and digital assets, becoming the latest financial institution looking to expand its footprint in the space.



In an internal memo obtained by Blockworks, Candace Browning, the bank’s global head of research, called cryptocurrencies and digital assets “one of the fastest growing emerging technology ecosystems.”



The sector is currently valued at about $2 trillion, inflows to new exchange-traded products are at $50 billion and venture capital firms are making significant investments in crypto and blockchain companies, she added.&nbsp;



“We are uniquely positioned to provide thought leadership due to our strong industry research analysis, market-leading global payments platform and our blockchain expertise,” Browning wrote in the note to colleagues.



The company has chosen Alkesh Shah to lead the effort, which will cover global cryptocurrency, digital assets and enabling technologies within the space. He will report to Michael Maras, the bank’s head of global fixed income, currencies and commodities research. Mamta Jain and Andrew Moss, who joined Bank of America since 2014 and 2019, respectively, will join Shah on the research team.



Shah, who began working for the company in 2013, will continue delivering the firm’s insights through mobile channels, including Insight Mobile, the Global Banking &amp; Markets content and the CRM app, Browning said in the memo. He previously led the firm’s global technology specialist team.



A spokesperson declined to comment further beyond the memo.



Bank of America’s latest research coverage expansion comes about a month after custody bank State Street, which oversees $40 trillion in assets, <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">launched a new division</a> focused on the shift to digital finance.



State Street CEO Ron O’Hanley said at the time that he expects digital assets to be one of the most significant forces impacting financial services over the next five years.



<a href="https://cms.blockworks.co/goldman-sachs-doubles-down-on-crypto-with-derivatives-trading-team/" target="_blank" rel="noreferrer noopener">Goldman Sachs revealed in May </a>that it would offer bitcoin derivatives to clients as well as opening a dedicated trading desk for cryptocurrency. The Wall Street bank continued the <a href="https://cms.blockworks.co/goldman-sachs-teams-with-galaxy-to-meet-institutional-digital-asset-demand/" target="_blank" rel="noreferrer noopener">expansion of its digital asset offering last month</a> by naming Galaxy Digital the liquidity provider for its bitcoin futures block trades.

Bank of america