One of the many anticipated futures for cryptocurrencies is their use in daily transactions.
But Bank of America Corp.’s (BAC) chief technology officer, Cathy Bessant, finds the prospect “troubling.” According to her, the relative lack of transparency in cryptocurrency ecosystems could prove to be a stumbling block for financial systems. “[T]he foundation of the banking system is on the transparency between the sender and the receiver, and cryptocurrency is designed to be nothing of the sort. In fact [it's] designed to be not transparent," she said in an interview with CNBC, adding that transparency helped catch the “bad guys” in finance. (See also: What's Holding Bitcoin Back? BofA Has Some Suggestions.)
Bank of America had earlier clamped down on users trading cryptocurrencies with its credit cards and issued a warning on its earnings call. “We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here," Bank of America CEO Brian Moynihan told analysts.
During her CNBC appearance, Bessant tamped down the rhetoric by providing a reason for the bank’s stance. “Just like we don’t allow stocks to be purchase on our credit card, we are not going to allow cryptocurrencies to be purchased on our credit,” she told the news network. (See also: Analyst: Crypto Bubbles Are Becoming More Dramatic.)
Are Cryptocurrencies Anonymous?
Bessant’s view of cryptocurrencies is derived from its early days, when its enthusiasts touted anonymous transactions as part of its allure. That capability led to its popularity on the Dark Web and infamy in mainstream media.
But the cryptocurrency ecosystem has evolved since then. It is now possible to trace transactions using bitcoin addresses. Litecoin, a bitcoin offshoot, is being positioned as a successor to bitcoin for daily transactions. Dash, another cryptocurrency, is making inroads as a medium for daily transactions in troubled economies. Bitcoin’s underlying technology, blockchain, has also generated excitement among financial institutions. They see various use cases, from rapid bank transfers to automated settlements, for their businesses. To that end, Bessant said distributed ledger technology had “extremely high potential.”
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