Blockchain Missing Use Case at Scale, Says BofA CEO
Bank of America CEO Brian Moynihan claims the company has “hundreds” of blockchain patents.
The problem with distributing the technology behind these patents? The most important thing is that there is little regulation in the crypto and blockchain space, and that Bank of America says it sees even fewer cross-business use cases for the technology at scale — at least for now.
“The reality is we’re running a payments business on our platform,” Moynihan said. “There are trillions of dollars a day and almost all of them are digital. If you think about blockchain, we have hundreds of patents on blockchain as a process and as a tool and as a technology.”
IN prepared remarks delivered before the US House Committee on Financial Services, the Bank of America CEO further clarified that “We [Bank of America] continue to evaluate applications of new technologies that have the potential to deliver value to our customers and clients, including distributed ledger technology (DLT) and blockchain. While Bank of America has blockchain patents and has used DLT in existing products, we still haven’t found a large-scale use case.”
Despite this, the bank manager admits that blockchain applications in the payment area “work perfectly”.
– We are investigating the use of this [blockchain] technology in several areas, including tokenization of internal client documents, instant cross-border payments, bank accounts and looking at ways to give workers faster access to their earned funds,” he added.
As reported by PYMNTS, financial services provider Visa is currently exploring ways to allow automatic recurring payments through the Ethereum blockchain.
Blockchain for payments
Governments often perceive cryptocurrency as a payment for dubious purposes and not as its own complex economy in line with traditional financial systems – making it difficult for traditional financial institutions to find and exploit appropriately regulated integration synergies that can benefit their customers.
Despite its problems, the alternative digital asset class has been positioned as one in the making payment method optional for many B2B customers. PYMNTS has reported much about how the combination of blockchain innovation with established systems can give rise to a coming revolution in the payment industry.
Despite a rocky year overall for crypto, an impressive one 8.2 trillion dollars was transferred across the Bitcoin blockchain alone in 2022 – according to crypto asset market and network data provider Coinmetrics. This averages over a quarter of a million dollars every second.
Near-instant or real-time payments (RTP) across the blockchain cost businesses less to process than transferring funds and take significantly less time than waiting for more traditional payment methods, such as those using ACH, to come through.
As Gary A. Vecchiarelli, Chief Financial Officer, Chief Financial Officer on CleanSpark told PYMNTS in a previous conversation, “It’s an extra step when you pay with crypto, but the benefits outweigh that… The transit is without a doubt better than the current banking system.”
The industry is not yet regulated
Most long-term, sustainable and successful businesses operate in default risk environments, supported by know-your-customer processes and long-standing controls. The crypto industry offers none of that.
According to research in the PYMNTS report, “Is regulation friend or foe of Blockchain?” The European Union (EU) and the United States (US) are currently taking the lead in blockchain regulation. In contrast, other countries, including China, have taken a more comprehensive and simpler step to ban it completely.
Nevertheless, as cryptocurrency reaches a decade plus of maturity legislators struggle to create regulations this balance limits the technology’s risks while unlocking its benefits.
France’s market regulator wants to speed up compulsory licensing of cryptocurrency service providers. At the same time, the United States Office of the Comptroller of the Currency (OCC) has flagged cryptoassets as a “especially risk topic” for US banks — urging them to take a “cautious and cautious approach to crypto activities and engagement with crypto-related firms.”
Granted nature in fast motion of digital resource technology, it has proven difficult to find the line between supporting innovation and at the same time protecting customers and business organizations that want to enter the market.
After all, the biggest mistakes troubles The industry’s fight in 2022 centered around common controls, including a lack of proper financial and accounting controlsand was generally exacerbated by first-day risk management omissions.
Perhaps when the dust settles and the blockchain technology roadmap is cleared, the singular use case for crypto payments will reveal itself. Only time will tell.
PYMNTS data: Why consumers are trying digital wallets
A PYMNTS study, “New Payments Options: Why Consumers Are Trying Digital Wallets” finds that 52% of US consumers tried a new payment method in 2022, with many choosing to try digital wallets for the first time.
