Bank of America, one of Wall Street’s largest banks, has launched a digital asset research coverage initiative as it looks to scale its crypto trading business and further strengthen its position within the cryptocurrency space.
Led by Alkesh Shah, head of Global Cryptocurrency and Digital Asset Strategy, the bank formed a specialist unit to feed growing institutional demand for exposure to the crypto ecosystem over the summer of 2021.
Bank of America’s newsroom issued a press release introducing their report entitled, “Digital Assets Primer: Only the first inning.” Leading with the viewpoint that bitcoin and cryptocurrencies are “too large to ignore,” Bank of America looks at the importance of the entire digital asset ecosystem.
The primer offers topics for consideration within the digital asset investment framework, including “tokens that act like operating systems; decentralized applications (DApps) without middlemen (powered by smart contracts); stablecoins pegged to fiat currencies; central bank digital currencies that could replace national currencies; and non-fungible tokens (NFTs) that connect creators and fans in a different way.”
Bank of America noted that venture capital investments in digital assets and blockchain technology surpassed $17 billion in the first half of 2021, “dwarfing” the $5.5 billion from the same period last year.”
As such, this surge in new companies is just the beginning of exploring how the digital asset ecosystem has been impacting various industries including technology, finance, supply chains, social media, and gaming.
Providing perspectives as to what this could mean for the crypto markets and the sector going forward are crypto experts from Bequant and ARK36:
Martha Reyes, Head of Research at digital asset prime brokerage and exchange BEQUANT, said,
“The banks are capitulating one by one. Bank of America is only the latest in a series of major banks to initiate coverage on digital assets or even get involved in the blockchain a la SocGen. For those of us working in the space, the fact that it’s too big to ignore is hardly news, and the regulators certainly aren’t ignoring it. Given that BTC is one of the top-performing assets this year, their clients are likely pushing for coverage, and it comes on the heels of their approval of futures trading for some clients. I imagine they are also thinking of the pipeline of deals to come given the money being invested now.”
Anto Paroian, Chief Operating Officer at crypto/digital assets hedge fund ARK36, said,
“Bank of America's press release announcing the launch of its digital assets research coverage is a significant bullish signal for the markets - and for a number of reasons:
First, it shows that the narrative of institutions buying into the digital asset space is alive and can still serve as a potential uptrend catalyst. In other words, we can still expect "explosive" news around this subject from big market players similar to those we saw in Q1 2021.
Second, BoA is yet another mainstream financial institution to publicly hail digital assets as a new asset class. Their comment about the industry being "too large to ignore" should give investors confidence that digital assets are here to stay - and that they are a force to be reckoned with.
The third and perhaps the most interesting thing to note is that the press release explicitly mentions NFTs as one of the current drivers of the digital asset market. Although there are many voices dismissive of the NFTs ecosystem as “just another bubble”, non-fungible tokens are already a massive economy. BoA seems to be well aware that NFT’s disruptive potential will spill over to other industries and extend well beyond this current bull market.”
