Big Banks Express Caution Over Crypto At Senate Hearing

Crypto currencies, big banks, Annual Oversight of Wall Street Firms, testimony

Chief executives from the biggest U.S. banks testified before the U.S. Senate Banking Committee on Wednesday (May 26) to express concerns about cryptocurrencies.

The testimonies were filed to the Senate ahead of the Annual Oversight of Wall Street Firms hearing, this year held remotely. Remarks were made by Bank of America’s Brian Moynihan, Citigroup’s Jane Fraser, Wells Fargo’s Charles Scharf, JPMorgan Chase’s Jamie Dimon, Goldman Sachs’s David M. Solomon and Morgan Stanley’s James Gorman.

The banking heads pointed to the volatility of the crypto market and its lack of supervision and oversight. They urged the committee — headed by Sen. Sherrod Brown (D-Ohio) — to appoint a supervisor sooner than later.

“Before we engage with cryptocurrencies, we see it as our responsibility to ensure we have clear governance and controls in place,” Jane Fraser, Citigroup CEO, said in her written testimony.

She said the bank is “focusing resources and efforts to understand changes in the digital asset space and the use of distributed ledger technology, including demand and interest by our clients, regulatory developments and technology advancements.”

Charles Scharf, the CEO and president of Wells Fargo, testified that the bank would continue to closely track the development of cryptocurrencies, “which have emerged as alternative investments products, though their status as a currency and mechanism of payment remains fluid.”

Bank of America’s Brian Moynihan’s statement indicated that the bank is evaluating the risks and opportunities of the crypto space and said it doesn’t “lend against cryptocurrencies” and won’t conduct business with any companies “whose primary business is cryptocurrency or the facilitation of cryptocurrency trading and investment.”

The Senate committee also discussed big banks’ response to the COVID-19 pandemic and their efforts to promote diversity within their ranks.

FinTechs and global lenders are also moving cautiously regarding crypto, and some have stopped working with it altogether. Paytm Payments Bank no longer offers support for cryptocurrency exchanges. The Reserve Bank of India also said that it wants companies to stop doing business with firms that use cryptocurrencies.