BOCA RATON, FLORIDA - With the easing of U.S. regulations on cryptocurrencies, bankers are thinking once again about issuing stablecoins and offering digital asset services such as custody and lending.
The largest banks are moving ahead with stablecoins. JPMorganChase was first with
Attendees at American Banker's Digital Banking Conference this week said that although they are seeing demand for stablecoins and digital asset services from customers, they are watching and waiting for firm regulatory guidance before plunging ahead. (Many smaller banks laid plans for bitcoin custody a few years ago; those plans were kiboshed by regulators, and the banks remain gun-shy.)
Executives at Pathward and KeyBank both said their customers are asking about digital assets.
"We've seen a lot of demand for stablecoin, especially as it relates to business to business and business to consumer payments, especially cross border use cases," said Will Sowell, divisional president of banking as a service at Pathward Bank in Sioux Falls, South Dakota. "Our approach has been to build on ramps and off ramps for that. As a sponsor bank, there's a large opportunity to participate."
Cleveland-based KeyBank's clients have expressed interest in a variety of digital currencies. Mostly they want KeyBank to hold those assets, according to Bennie Pennington, senior vice president, embedded finance at KeyBank.
"We are exploring it, but there is some demand, and there will be some things happening here," Pennington said.
Leaders at Royal Business Bank and Piermont Bank struck a more cautious note.
"We are monitoring the digital asset space," said Rodrigo Suarez, chief banking officer at Piermont Bank. "We're not necessarily planning anything specific right now. We need to make sure that what we're doing is relevant, but not necessarily just following a trend."
Gary Fan, chief operating officer at Royal Business Bank, also said his bank is monitoring the digital asset space.
"We have to see how the regulatory agencies play out," Fan said. "We do have the regulatory agencies above us, and more or less those people are uncomfortable. It's very, very difficult for us to enter new areas like that. For us specifically, we're looking at it, but it's probably not one of the top one or two priorities that we're going to work on in the next 12 months."
Dara Tarkowski, managing partner at Actuate Law, said a wait-and-see approach makes sense from a legal perspective.
"When you have a lack of a true regulatory framework, and you still have states breathing down your neck, banks need to always go to find their own true North Star," she said. Banks need to go back to safety and soundness principles, and create policies and procedures that will safeguard customers, she said.
