- Bank of America says the crypto market is now less more about Bitcoin. It’s too large to be ignored.
- It added that DeFi has the potential to provide financial services to over 1.7 billion unbanked globally.
- The future of the industry, however, depends on the public policy framework of governments.
Bank of America (BofA) has published a research report outlining the current and prospective state of the cryptocurrency industry, which now holds more market value than the GDP of Italy and Canada. This is the first digital asset publication by the bank since the creation of its crypto research team in July.
Crypto is “too large to ignore”
In the report, Bank of America highlighted how significant the crypto market has become. An industry with a market valuation of over $2 trillion and more than 200 million global users “is too large to be ignored.” The bank also said the crypto ecosystem is currently less more about Bitcoin. There are now tokens that act like operating systems, decentralized applications (DApps), stablecoins, central bank digital currencies (CBDCs), and non-fungible tokens (NFTs).
The bank also mentioned the increased investments in the cryptocurrency market. Venture Capital investments in digital assets have risen by nearly 210%, from the $5.5 billion last year to the current record of $17 billion in H1 this year. “Our view is that there could be more opportunity than skeptics expect.”
Regarding decentralized applications, Bank of America stated that it’s possible for 1.7 billion unbanked globally to gain access to financial services with their smartphones. “We expect further value creation as bitcoin is increasingly adopted, alternative coins/tokens enable new applications, and a pipeline of Venture Capital-backed private companies reach public markets.”
Regulatory uncertainty is a near-term risk
The popularity of cryptocurrency drew the attention of the global regulators to the emerging sector. While countries like China have banned the use and trading of digital currencies in the nation, there are others keen on regulating crypto. Bank of America believes that the future of the crypto industry lies in the “public policy framework” of governments. Digital assets may be targeted if they are perceived as a risk to the payment systems or credit flow disruption.
“Regulatory uncertainty is the largest near-term risk in our view, but regulation may drive increased investor participation over the long term once the ‘rules of the road’ for digital assets are established,” BofA added.