WASHINGTON—The American Bankers’ Association (ABA) has issued a new report that suggests banks consider partnerships with crypto firms based on the increased profitability of the sector and client interest.
The report is 20 pages in length and provides a high-level overview of crypto with a glossary, maps crypto business activities to bank products and services, according to the organization.
The ABA further suggests crypto use cases for banks with revenue models and regulatory issues for each use case, Forbes reported.
The report classifies crypto assets into four categories: cryptocurrencies, stablecoins, central bank digital currencies, and non-fungible tokens. Decentralized finance (DeFi) is also mentioned as well.
The Crypto Cases
The crypto use cases listed in the report for banks are:
- Store of Value. The report describes how companies that facilitate the store of value earn revenue by buying and selling on their platforms
- Custody / Wallet Provider. The report explains crypto companies allow users to store their cryptocurrencies in a digital wallet and in theory could charge a service fee
- Interest Bearing Accounts. The customer lends his or her crypto for interest and a bank could earn for a fee or percentage of the crypto earned
- Payments - Banks could charge fees for these services similar to a debit or credit card transaction
- Lending. Banks could provide crypto lending to borrowers for a fee ‘
- Exchange Trading. Revenue models include charging transaction fees, listing charges for adding crypto to a platform, and deposit fees
- Broker-dealer - The revenue from collecting the spread on transactions for crypto assets that are classified as securities
- Insurance - Decentralized insurance allows a pool of investors to share the risk among themselves in return for the insurance premium
- Network utility - Describes utility tokens as providing instant revenue for the entity creating the token and selling it, since it receives either a different form of crypto asset or a payment in a traditional currency
- Asset Management - This use case for banks would enable a fee for service on a crypto portfolio