Bank Of America Calls Bitcoin ‘Impractical,’ And Crypto Community Has A Lot To Say About That
Bank of America Corp (NYSE: BAC) faced some backlash from the crypto community earlier today, after its criticism of Bitcoin from its latest research note made headlines.
What Happened: The bank’s research note titled “Bitcoin’s Dirty Little Secrets” stated that there is “no good reason to own Bitcoin unless you see prices going up”. According to the bank, Bitcoin’s volatility makes it impractical as a store of value or a payments mechanism.
Why It Matters: The research note was not well received by the crypto community who took to Twitter to share their thoughts about it.
Samson Mow, CSO of blockchain technology company Blockstream, shared a graph of Bank of America’s stock price over the years and said, “If your stonk chart looks like this, you don’t get to call Bitcoin volatile.”
If your stonk chart looks like this, you don’t get to call #Bitcoin volatile. @BankofAmerica pic.twitter.com/nVpqlFhejY — Samson Mow (@Excellion) March 19, 2021
The research note also claimed that central bank digital currencies (CBDCs) would be “kryptonite for cryptocurrency”, which most users described as the “worst take” on cryptocurrency they have heard.
Popular Bitcoin proponent Anthony Pompliano stated on Twitter that the Bank of America has a higher chance of failing than Bitcoin, and was quickly backed by most of his 650k followers on the platform. CZ, CEO of the largest cryptocurrency exchange by volume Binance, suggested that it wouldn’t be just Bank of America, but rather, all banks that would fail before Bitcoin did.
Bank of America has a higher chance of failing than Bitcoin. — Pomp (@APompliano) March 17, 2021
The bank’s criticism, however, was appreciated by known Bitcoin critic Peter Schiff – According to him, the research report “concluded the obvious” and he went on to reiterate his belief that Bitcoin is the ultimate bubble.
Story continues
Bank of America’s stance on Bitcoin comes at a time where large institutions and public companies are buying and holding the digital asset on their balance sheets. Earlier this week, Morgan Stanley (NYSE: MS) said it would offer Bitcoin to its wealthy clients.
At the time of writing, Bitcoin was trading at $58,500, up 5% in the past 24-hours. With over $1 trillion in market cap, Bitcoin is larger than JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc (NYSE: C) ,and Bank of America combined.
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Crypto, ESG and office returns: Banks show when they would — and would not — rather be first
Morgan Stanley jumped to the front of the crypto line Wednesday when it told its financial advisers it is letting its wealth-management clients access three investment funds that enable ownership of Bitcoin, CNBC reported.
Individual clients would need at least $2 million in assets held by the bank, and an account that’s been open for at least six months. Investment firms can qualify with $5 million in assets held by Morgan Stanley and a 6-month-old account.
The bank will cap Bitcoin investments at 2.5% of a client’s net worth, CNBC reported, citing anonymous sources.
The offerings could be available as early as next month — once financial advisers take relevant training courses, the network’s sources said.
That timeline would make Morgan Stanley the nation’s first large bank to offer customers that level of crypto access. BNY Mellon said last month it is developing a client-facing prototype for a platform that would allow the bank to hold, transfer and issue cryptocurrencies, but that capability won’t be ready until later this year. However, it doubled down on its crypto presence Thursday, investing in Fireblocks, a startup that builds tools for the secure storage and transfer of digital assets, The Wall Street Journal reported.
Goldman Sachs restarted its cryptocurrency trading desk this month and was set to begin offering Bitcoin futures and other products by about now.
JPMorgan Chase this month filed documents for a debt-investment offering tied to a group of stocks with crypto exposure, such as MicroStrategy and Square, CNBC reported. The bank arguably forced a crypto tipping point on Wall Street last year, when it announced it would extend banking services to digital asset exchanges Coinbase and Gemini.
Even after that announcement, rival Goldman was skeptical, labeling Bitcoin an “unsuitable” investment for clients because of its volatility.
Morgan Stanley, by contrast, calls it suitable for clients with “an aggressive risk tolerance,” according to CNBC.
Summer: In the office or out?
What constitutes industry leadership in the crypto sphere may be clear to those jockeying for position. But on other matters, such as when banks should return to the office, the idea of leading depends on how the front office values the productivity that would be perceived to add versus the health and safety risks.
JPMorgan is planning to resume in-person internships in June, The New York Times reported Tuesday, citing anonymous sources. Bank of America, however, is conducting its 10-week internships virtually, Business Insider reported Thursday, citing an internal memo.
“We are encouraged by recent signs of progress around the world and will continue to assess the current environment to determine if it is appropriate to bring you in for an in-person experience at a later time, as we sincerely hope to do," the bank wrote.
The prospect of a second summer with virtual internships served as a primary driver for Goldman Sachs CEO David Solomon last week to tell the bank’s employees over Zoom that he hoped to set a midyear office-return date.
“Getting them in to the office is the best way to get them connected to Goldman Sachs,” Solomon said, according to Reuters. “We understand that until more of us are vaccinated, that is going to be a challenge. But based on the current pace of vaccinations, and where we hope to be by the summer, we believe that we are well-positioned and there is a good chance that we can meet that goal.”
Last month, Solomon called the year of remote work an “aberration” and groused more pointedly about the vaccine rollout. “This is not ideal for us, and it’s not a new normal,” he said.
Goldman and JPMorgan saw their office-return plans derailed last fall, when both banks sent New York-based staff home after employees tested COVID-positive.
Their summer-or-bust hard-charge comes as HSBC closed its main Hong Kong office this week after three people working in the building popped positive.
Nonetheless, JPMorgan has committed to letting its London-based employees return March 29, when the British government is set to end “stay-at-home” rules it imposed in December, according to The New York Times. In-person staffing, however, will be capped at 50%.
Citi, for its part, will begin inviting more workers back to its offices in July, expecting 30% of its North America employees to return over the summer, Bloomberg reported Wednesday.
Wells Fargo CEO Charlie Scharf, by contrast, struck a more reluctant tone.
“We’re going to bring people back when it’s safe, and we’re going to give people notice,” he told Bloomberg, adding that he’s “not interested in rushing people back.”
“We’re going to play it by ear, and it’s going to be city by city, state by state, and we’ll make those decisions when we think it’s safe,” Scharf said.
JPMorgan CEO Jamie Dimon told Bloomberg he anticipates branch and cash management personnel — and “probably most of the trading floor” will work permanently from the office, but others might split time between remote and office work.
Apollo Global Management is embracing the split. The company said it is giving employees the option of working remotely two days a week for the rest of the year.
Rob Dicks, talent and organization lead for capital markets at Accenture, said this is where he sees front-office opinion in the finance and tech spaces bifurcate. “Here’s where you see the split between the banks saying, ‘Yes, but we want to see you here,’ and the tech firms saying, ‘Hey, you’re probably right, you have proven, across teams and across individuals, you have the ability to work from home,'” Dicks told Bloomberg.
The ESG edge
While the concept of leadership on office-return timelines reveals a polarizing dichotomy, banks seem more in agreement that any advantage in the battle to show who’s most socially aware should be showcased. JPMorgan on Tuesday issued revised bylaws scrubbed of gender-specific pronouns — “he,” for example, might be replaced by the title of the executive in question.
Citi this month found itself ahead of the curve on gender representation in its board — thanks to its first female CEO who, in taking the seat once occupied by Michael Corbat, pushed the proportion of women on the bank’s 16-person board to 50%. That puts Citi ahead of previous gender diversity leaders Credit Agricole, BNP Paribas and Societe Generale among the world’s top 20 banks, Bloomberg reported Monday. (Large French companies are required by law to comprise at least 40% of their boards with women.)
“Jane Fraser is a bright spot, but there’s still a long way to go for banks to have gender diversity at the top and middle levels,” Marypat Smucker, who runs the Seattle-based research firm Parallelle Finance, told the wire service.
Still, Citi is no stranger to fighting gender inequity. In 2018, it became the first major U.S. bank to publish raw data concerning the gender pay gap.
Wells Fargo’s Scharf drew a line in the sand last June, when he said the bank would tie executives’ year-end compensation to their efforts to expand diversity. Canada’s six largest banks, likewise, are tying environmental, social and governance metrics into CEOs' pay packages — a standard held by only 9% of the 2,684 companies in the FTSE All World Index, Bloomberg reported Thursday.
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