Changing Banking Attidues on Bitcoin ETFs
The most prominent US bank is set to accept BlackRock's spot Bitcoin ETFs as collateral for loans to clients in trading and wealth management, Bloomberg reported ahead. This major announcement indicates the banking and cryptocurrency interaction have been redefined. Key Changes | Summary of the Regulatory Backstage Behind Them
Key Changes
BTC-ETFs and in Liquid Assets:
Bitcoin ETFs are now considered one of the liquid assets the client holds — this reorders the client's asset porfile so he might get a loan.
Much Broader Client:
This round will be available to all clients (retail and high-net-worth will follow later, a change in policy from prior practices which only looked at specific transactions one-by-one to approve or disapprove.
In promoting shifts in policy, changes on the regulatory front
The change is in compliance with what has become a trend as financial institutions worldwide continue to voice their newfound love of cryptocurrencies and is driven by the regulatory relief in the U.S., particularly under Trump.
Regulatory Developments
January: SEC repeals SAB Rule 121 — making it harder for banks to invest in crypto
February: Trump announces Jonathan Gould, champion of the industry and administrator now nominated of the Office of Comptroller of the Currency (OCC)
March: The OCC and FDIC removed the requirement that banks pre-approve crypto-related activities from the program, making it easier for a bank to bring on such customers.
April: Fed removes barriers preventing banks from doing business with digital assets.
Removal of Fraud Warnings: All the crypto fraud warnings were removed in 2023 too suggesting a softer stance of the regulators.
Future Outlook
According to Bitwise predictions, by 2025 Bitcoin ETFs are predicted to finally be offered through major financial institutions such as Merrill Lynch, Morgan Stanley and UBS. The expected expansion indicates the recognition of digital assets as mainstream finance and investable by aggregators of capital postinstitutionalization for clients.
The adoption of BTC ETFs as collateral for loans is a major step forward in the banking industry's treatment of cryptocurrencies. Regulatory barriers come down and we will see banks begin to further engage with digital assets over the course of time, welcoming greater acceptance and investment channels in the coming years.
