The roadmap for banks adopting Bitcoin

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U.S. banking regulators are investigating how traditional banks can hold bitcoin for a variety of purposes.

The following is taken from a recent edition of Deep Dive, Bitcoin Magazine’s premium market newsletter. To be among the first to receive this and other on-chain bitcoin market analysis straight to your inbox, Subscribe now.

Yesterday, in a major announcement, news broke that US banking regulators were exploring a roadmap for traditional banks to hold bitcoin so that the asset can be used for customer transactions, as collateral for loans. or simply to exist on bank balance sheets. Even under the guise of increasing regulation, this clearly proves that traditional banks and their customers are demanding greater use of bitcoin, which will further accelerate the growing financialization of bitcoin.

“I think we need to empower banks in this space, while managing and mitigating risk appropriately,” FDIC President Jelena McWilliams said. “If we don’t bring this activity inside the banks, it will grow outside the banks … Federal regulators won’t be able to regulate it.”

Outside of the traditional banking system, we have seen an increase in the demand for bitcoin denominated loans and bitcoin as collateral for both trading and lending. One of the best places to see this action is the rise of Genesis’ digital asset lending portfolio. As of their second quarter results, they have $ 8.3 billion in active loans outstanding, with 42.3% of those bitcoin-denominated loans worth $ 3.5 billion.

Since launching their lending business in March 2018, cumulative loan origination has reached $ 66 billion, indicating significant growth and demand for bitcoin loans.

Source: Genesis Q2 Quarterly Report
Source: Genesis Q2 Quarterly Report

BlockFi is another company where we can keep up with market demand and with BlockFi sharing internal numbers with Arcane Research in this special report, we can see the 50-fold and seven-fold growth in their demand for retail loan bitcoin collateral over the past two years, denominated in USD and BTC respectively.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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