According to participants, partnerships between NYDIG and 300 US banks have been finalized, with regulatory and security concerns that lingered now resolved.
Local banks believe that offering Bitcoin trading will keep them afloat as customers have expressed demand for it. Harold Reynolds, CEO of the $1.3 billion-asset BankSouth in Greensboro, Georgia said, “We have seen significant activity in cryptocurrency transactions from our customer accounts, and a few investments have been rather large, so that is obviously getting our attention.”
It seems like banks are taking a cautiously optimistic approach with digital assets like Bitcoin and realize times are changing. Banks are currently lending on physical assets like trucks, farm equipment and commercial real estate. Zach Bishop, executive vice president of technology, operations and security at the $56 billion asset Synovus, recognizes that adopting digital assets will play a crucial role in the future of finance as Bitcoin has the irrefutable record of ownership, value and unmatched security.
Although it is exciting that banks are starting to offer Bitcoin products, there are tradeoffs. Bank customers can use funds from their bank account to purchase and store Bitcoin with NYDIG, but the Bitcoin cannot be transferred out to a different wallet. This mitigates the risk that Bitcoin would be stolen from a bank partner’s mobile app, but also won’t give the client self sovereignty over their Bitcoin, a key trait of the asset.
Partnering with NYDIG is providing traditional banks with some degree of comfort as they begin to adopt this new asset class. They have seen the money flowing out of their banks into cryptocurrency exchanges. By providing bitcoin trading and custody services themselves, banks are hoping to capture a slice of the pie.