Bank of America has cited cryptocurrency as a material risk to its business, public records show.
The technology could hamper the second-largest U.S. bank's ability to comply with anti-money-laundering regulations, pose a competitive threat and force the company to spend more money to keep up with the times, the bank said in its annual filing with the Securities and Exchange Commission.
The first reference is in the discussion of AML, know-your-customer, sanctions and foreign corruption laws in the U.S.
"Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds," the filing says, explaining further: "Our ability to comply with these laws is dependent on our ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability."
Yet perhaps more notable is the acknowledgement that cryptocurrency poses competitive risks to the bank.
In a passage about new competitors in the financial services industry, Bank of America expressed caution about how client preferences could lead them to use products like cryptocurrencies - for which, as it stands, the bank does not offer any support.
Bank of America notes in the filing:
"Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies."
This doesn't come as a surprise because the institution began preventing clients from buying cryptocurrencies with credit cards*. Bank of America was one of several U.S. banks that recently banned credit card purchases of cryptocurrency.
Maybe this is why Bank of America is also a prolific filer of patent applications for blockchain technology concepts because they finally understand the value and threat to their financial infrastructure.
Correction: *A spokeswoman for the nation's second-largest credit card issuer said that the bank would begin declining such transactions as early as Friday.
Customers will still be able to purchase cryptocurrencies with Bank of America accounts tied to debit or ATM cards.*