Finance

US banking chiefs to urge need for controls in cryptocurrency sector

The chief executives of major US banks including Citigroup and Bank of America have expressed their caution about cryptocurrencies in written testimonies in advance of a US Senate hearing.

The testimonies were filed to the Senate ahead of a remote hearing with the committee on banking, housing and urban affairs focused on the annual oversight of Wall Street firms on 26 May.

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

READ Crypto prices rebound as Musk mulls eco-friendly bitcoin mining

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, said the bank continued to “closely and actively follow developments around cryptocurrency”. He added Wells Fargo would be announcing a pilot for a distributed ledger technology “to facilitate next-generation settlement services in a variety of areas”.

Bank of America’s Brian Moynihan said the company is evaluating opportunities, risks and client demand related to crypto.

“Currently, we do not lend against cryptocurrencies and do not bank companies whose primary business is cryptocurrency or the facilitation of cryptocurrency trading and investment,” he said.

READ Here’s why China wants to go further in its crackdown on cryptos

The price of cryptocurrencies such as bitcoin and ethereum have plunged in recent weeks after a strong rally that saw bitcoin’s price exceed $60,000 earlier this year. On 26 May at 9.20am GMT bitcoin was trading at just above $40,000 according to pricing website Coindesk.

Bitcoin has been hit by Tesla boss Elon Musk’s U-turn on accepting the cryptocurrency in payment for the company’s electric cars on environmental grounds, and China’s announcement on 21 May that it would crack down on crypto mining and trading.

Some of bitcoin’s biggest advocates have come together in recent days to help promote sustainable bitcoin mining in the aftermath of Musk’s environmental concerns about the crypto.

Representatives from Tesla, MicroStrategy, Galaxy Digital, Argo Blockchain, Blockcap, Hut 8 and Riot Blockchain among others have formed The Bitcoin Mining Council.

The group aims to “promote energy usage transparency and accelerate sustainability initiatives worldwide”, said Michael Saylor, the boss of software firm MicroStrategy, which has invested billions in bitcoin.

To contact the authors of this story with feedback or news, email Bérengère Sim and James Booth

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