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Are the Cryptocurrencies in an Early Stage of Institutional Adoption?

The Bitcoin ecosystem is expanding and becoming widely adopted. Even traditional financial organizations are beginning to look differently at this popular innovation.

Banks, investment companies and financial institutions such as the International Monetary Fund (IMF) are starting to take position and participate in the cryptocurrency ecosystem in a clear manner, opening a new phase of institutional adoption that could have significant repercussions on the ecosystem and its future development.

Christine Lagarde, the president of the IMF talked about the cryptocurrencies on several occasions. In her latest statement she said it was a matter of time until the cryptocurrencies would be regulated on a global level. According to Lagarde, the regulatory movements in countries such as the United States of America or China are not isolated cases, but more a tendency that would become global, especially due to the influence of the cryptocurrencies and the potential repercussion they might have on the global financial system. She said: “Clearly, it is a field that needs international regulation and adequate supervision.”

In October last year, the director of the IMF pointed out the necessity for the central banks and financial entities around the world to closely supervise the cryptocurrency environment, emphasizing the urgency to understand their nature in order to take advantage of their potential.

Moreover, at the beginning of March, Lagarde said the International Monetary Fund should take a fixed stance towards the cryptocurrency ecosystem. On the other hand, she also said these cryptographic instruments did not pose a real threat for the global economic system, especially for the central banks around the world and the fiat currencies.

Nevertheless, some banks think differently.

Bank of America and JPMorgan Chase think the cryptocurrencies present a risk for their business. Both institutions are developing project based on the blockchain technology, but they are closely observing and measuring the influence of the cryptocurrencies on their business.

The latest report that Bank of America filed to the U.S. Securities and Exchange Commission (SEC) contains a series of considerations about the main risks for the business, where the influence of the cryptocurrencies is pointed out as one of the most important ones.

According to the report, the cryptocurrencies could limit the capacity to track the movement of funds, making it difficult to comply with the regulations in sensible areas such as the money laundering.

Bank of America also warned that some clients could opt for institutions already involved in the cryptographic investments, which could leave them out of the game, especially because they must fully comply with the regulations in the United States.

The statement says: “The clients could opt to do business with other participants on the market that participate in businesses and offer products we consider to be speculative or risky, such as the cryptocurrencies.”

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