Banks tiptoe toward crypto, awaiting more green lights from US regulators
Banks seek more clarity around AML-crypto regulations
NEW YORK: Big US banks are holding internal discussions about expanding into cryptocurrencies as they get stronger endorsements from regulators, but initial steps will be tentative, centering on pilot programs, partnerships or limited crypto trading, according to four industry executives. Wall Street giants that had been largely blocked from many crypto activities by strict regulations are poised to grow quickly.
Yet the biggest lenders are still hesitant to be the first among rivals to expand too heavily into crypto in case they fall afoul of changing rules, said the four executives, who declined to be identified since they were discussing internal business plans. If a major firm expands without issues, others will be fast followers to run small-scale pilot projects and weigh other business prospects, the executives said. Jamie Dimon, CEO of the largest US bank, JPMorgan Chase, ruled out getting into custody - storing crypto assets for clients - or expanding significantly even if regulations ease.
'When I look at the bitcoin universe, the leverage in the system, the misuse in the system, the money laundering issues, trafficking, I'm not a fan of it,' Dimon, a longtime crypto skeptic, told investors last week. 'We're going to allow you to buy it, we're not going to custody it. ... I don't think you should smoke, but I defend your right to smoke. I defend your right to buy bitcoin,' he added. US President Donald Trump vowed to become the first 'crypto president' before he took office. He has since wooed the industry's elite at the White House, promised to boost the adoption of digital assets and said he aims to create a strategic bitcoin reserve.
While there are welcoming signs, banks are seeking even clearer guidelines from the government clarifying what they can do in crypto, more than half a dozen industry executives said. 'The shift in the stance is encouraging for traditional lenders, but they are still approaching it with caution and viewing the changes in regulation as an opportunity to engage and not a free pass,' said Dario de Martino, A&O Shearman M&A partner who works on crypto-related issues. Custody businesses to store and manage crypto assets are promising, bankers and executives said, but they have thin margins and potentially pose high risks. Most banks are likely to enter custody businesses through partnerships with existing crypto firms, sources said.
Charles Schwab CEO Rick Wurster told Reuters earlier this month that the traffic lights from financial regulators were flashing 'pretty green' for large firms to grow in crypto. The signals have reinforced Schwab's plans to offer spot crypto trading within a year, he said. New regulators under Trump have also signaled more bank-friendly crypto policies. The US Office of the Comptroller of the Currency paved the way for lenders to engage in some crypto activities, such as custody, some stablecoin activities and participation in distributed ledger networks. The Securities and Exchange Commission also scrapped earlier accounting guidance that made it expensive for banks to deal in crypto.
Bank of America could launch stablecoins, its CEO Brian Moynihan said earlier this year, and the US banking industry will embrace cryptocurrencies for payments if regulations permit them. Meanwhile, Morgan Stanley MS.N wants to work with regulators to see how it can be a middleman for crypto-related transactions, CEO Ted Pick said earlier this year. The lender is also exploring adding crypto to its e-trade platform, a source said. Some of the large banks are also exploring issuing a joint stablecoin, with the conversations in initial stages, another banking source said.
Big banks seek more clarity around anti-money laundering rules and supervision before diving deeper into crypto. They are also asking for consistent guidelines across banking and market regulators before launching new businesses in digital assets, whose values are volatile. For now, banks are weighing their crypto prospects and running small-scale pilot programs. 'While a much-improved environment, banks will continue to have concerns around anti-money laundering and regulatory compliance,' said Matthew Biben, co-head of the global financial services group at law firm King & Spalding.
Shifting landscape
Banks want to understand if they can engage in crypto lending, or if they are allowed to become market makers for digital assets, one of the banking sources said. The rules for traditional banking businesses are very well defined and there is complete clarity over what a bank is allowed to do and what is outside their ambit, similar well-defined guidelines are needed for digital assets too. The working group on crypto under David Sacks, the Trump-appointed crypto czar, has no representation from banking regulators, which needs to be amended if the big banks are allowed to play any meaningful role in the business, two banking sources said. - Reuters
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Kuwait Times
2 days ago
- Kuwait Times
Banks tiptoe toward crypto, awaiting more green lights from US regulators
Banks seek more clarity around AML-crypto regulations NEW YORK: Big US banks are holding internal discussions about expanding into cryptocurrencies as they get stronger endorsements from regulators, but initial steps will be tentative, centering on pilot programs, partnerships or limited crypto trading, according to four industry executives. Wall Street giants that had been largely blocked from many crypto activities by strict regulations are poised to grow quickly. Yet the biggest lenders are still hesitant to be the first among rivals to expand too heavily into crypto in case they fall afoul of changing rules, said the four executives, who declined to be identified since they were discussing internal business plans. If a major firm expands without issues, others will be fast followers to run small-scale pilot projects and weigh other business prospects, the executives said. Jamie Dimon, CEO of the largest US bank, JPMorgan Chase, ruled out getting into custody - storing crypto assets for clients - or expanding significantly even if regulations ease. 'When I look at the bitcoin universe, the leverage in the system, the misuse in the system, the money laundering issues, trafficking, I'm not a fan of it,' Dimon, a longtime crypto skeptic, told investors last week. 'We're going to allow you to buy it, we're not going to custody it. ... I don't think you should smoke, but I defend your right to smoke. I defend your right to buy bitcoin,' he added. US President Donald Trump vowed to become the first 'crypto president' before he took office. He has since wooed the industry's elite at the White House, promised to boost the adoption of digital assets and said he aims to create a strategic bitcoin reserve. While there are welcoming signs, banks are seeking even clearer guidelines from the government clarifying what they can do in crypto, more than half a dozen industry executives said. 'The shift in the stance is encouraging for traditional lenders, but they are still approaching it with caution and viewing the changes in regulation as an opportunity to engage and not a free pass,' said Dario de Martino, A&O Shearman M&A partner who works on crypto-related issues. Custody businesses to store and manage crypto assets are promising, bankers and executives said, but they have thin margins and potentially pose high risks. Most banks are likely to enter custody businesses through partnerships with existing crypto firms, sources said. Charles Schwab CEO Rick Wurster told Reuters earlier this month that the traffic lights from financial regulators were flashing 'pretty green' for large firms to grow in crypto. The signals have reinforced Schwab's plans to offer spot crypto trading within a year, he said. New regulators under Trump have also signaled more bank-friendly crypto policies. The US Office of the Comptroller of the Currency paved the way for lenders to engage in some crypto activities, such as custody, some stablecoin activities and participation in distributed ledger networks. The Securities and Exchange Commission also scrapped earlier accounting guidance that made it expensive for banks to deal in crypto. Bank of America could launch stablecoins, its CEO Brian Moynihan said earlier this year, and the US banking industry will embrace cryptocurrencies for payments if regulations permit them. Meanwhile, Morgan Stanley MS.N wants to work with regulators to see how it can be a middleman for crypto-related transactions, CEO Ted Pick said earlier this year. The lender is also exploring adding crypto to its e-trade platform, a source said. Some of the large banks are also exploring issuing a joint stablecoin, with the conversations in initial stages, another banking source said. Big banks seek more clarity around anti-money laundering rules and supervision before diving deeper into crypto. They are also asking for consistent guidelines across banking and market regulators before launching new businesses in digital assets, whose values are volatile. For now, banks are weighing their crypto prospects and running small-scale pilot programs. 'While a much-improved environment, banks will continue to have concerns around anti-money laundering and regulatory compliance,' said Matthew Biben, co-head of the global financial services group at law firm King & Spalding. Shifting landscape Banks want to understand if they can engage in crypto lending, or if they are allowed to become market makers for digital assets, one of the banking sources said. The rules for traditional banking businesses are very well defined and there is complete clarity over what a bank is allowed to do and what is outside their ambit, similar well-defined guidelines are needed for digital assets too. The working group on crypto under David Sacks, the Trump-appointed crypto czar, has no representation from banking regulators, which needs to be amended if the big banks are allowed to play any meaningful role in the business, two banking sources said. - Reuters
Arab Times
13-05-2025
- Arab Times
Common Pitfalls in Fintech App Development (and How to Avoid Them)
The Fintech industry has become one of the most dynamic and unforgiving sectors in software development. It is quite competitive, so companies are always trying to innovate and quickly introduce new features to the market. However, many teams go in with a great idea and strong technical skills, only to find themselves derailed by unexpected challenges. As top fintech developers have observed, the pressure to be innovative and deliver quickly often results in various common mistakes that can prove quite costly. Today, we'll break down the most common issues that development teams face and look at how to steer clear of them. Ignoring Regulatory Requirements Early On One of the most common mistakes is focusing on an app's features and trying to comply later. But in fintech, compliance isn't just a final checkbox, but a crucial part of development. It shapes how the app is designed as it dictates how you are supposed to handle data. The problem is that there are dozens of regulatory measures you need to consider. For example, the GDPR in Europe and the CCPA in California dictate how you can collect and store data. There are also AML and KYC rules in the US and other parts of the world, as well as PCI DSS standards for handling card payments. Non-compliance with any of these can result in huge legal penalties or restrictions on where your app can operate. A good way to deal with these is to treat compliance as a design input. Understand the data and financial regulations in all the regions you want to operate in and build for compliance. Ensure you reach out to compliance experts or legal consultants for expert input. Inadequate Security Architecture Since fintech involves finances and sensitive personal information, security is part of the foundation. Unfortunately, some developers start without a solid security architecture, only taking basic measures like HTTPS and password encryption. That barely scratches the surface when you are dealing with financial data, identity verification, and fraud prevention. To avoid this, create a solid security architecture for every layer of the system – from how APIs are designed to user session management. This includes measures like end-to-end data encryption, strong authentication flows, secure configurations, and constant monitoring for unusual behavior. Essentially, if one part of the system is compromised, it shouldn't expose the entire platform. Poor Scalability Planning Scalability often doesn't get the attention it requires in early development as most fintech companies tend to target a particular region. However, growth can happen fast (and unexpectedly) in the industry. It doesn't even have to be new users, it can be the transaction volume or third-party integrations. If you hadn't factored scalability well, this would result in slow load times, failed transactions, timeouts, or inconsistent performance during peak times. You may then be forced to refactor the architecture, migrate databases, or rework entire components. A better approach is to plan for scalability from the first day, even when you are starting small. This includes choosing a cloud infrastructure that can auto-scale, designing stateless services where possible, and using microservices to decouple heavy processes. Essentially, think about what happens when the different numbers you are targeting triple. Bad User Experience (UX) in Complex Workflows Fintech apps often ask users to carry out processes that aren't exactly simple. These can be linking bank accounts, verifying identity, or completing multi-step transactions. These are all necessary, but when they are presented in an interface that isn't intuitive, users can abandon the process and even drop the app. It's important to understand that while users are willing to do complex stuff on a desktop, the expectations are different on an app. But the problem isn't the complexity itself, it's how it's presented. A poor layout, too many steps, and unexpected interruptions like being logged out are annoying. During the design, create workflows that feel effortless for the user, even when the processes are complicated under the hood. Break them into manageable steps, but use progress indicators so that users know where they are. Where possible, pre-fill information. And if something goes wrong, let the error be clear and helpful, not a vague warning that will leave the user guessing. A Weak Testing Strategy To ensure reliability, testing is critical in fintech. However, some teams often rely on general testing practices that focus on surface level functionality. This isn't enough in fintech as a missed decimal point can cost real money and damage trust. Testing should be incorporated during the development as an ongoing process, so ensure you have a robust testing framework for each layer. Otherwise, bugs will be harder to isolate and more expensive to fix when the development is complete. Go beyond quality assurance to include unit tests, integration tests, security tests, and performance checks. You should also test for unexpected conditions, such as when a transaction fails midway or when two users submit the same action at once. Ensure that manual testing is also backed up by automation. Failing to Plan for Continuous Support & Updates Development teams often underestimate the amount of ongoing maintenance, updates, user support, and compliance changes that come after the launch. And without a proper maintenance plan, even the best products can start to show cracks within months. The problem is that fintech is highly regulated and fast-evolving. New compliance requirements can be issued at any time, banking APIs can change, user behavior can shift, and new security threats can prompt urgent updates. If your team can't respond quickly, you risk downtime, customer dissatisfaction, and even falling out of compliance. This means that during the planning phase, you need to address how different issues are handled post-launch. For example, what happens when a bank changes how it handles authentication? Ensure that there's clear ownership in the development team to address such issues promptly. Ultimately, success in the fintech industry goes beyond launching fast. While you still need to be innovative, follow a comprehensive development framework to ensure reliability, security, and user-friendliness. Author Mary Zayats, Lead Business Analyst and Banking IT Consultant Mary joined ScienceSoft in 2016 and promptly won the position of a lead business analyst and banking IT consultant, owing to her meticulous approach to details, strong communication skills, and deep knowledge of the banking legal framework. Mary helps ScienceSoft's banking clients drive high business efficiency and improve customer experience with the help of mature automation tools and advanced techs. She elaborates unique IT solutions that provide robust data protection and 100% regulatory compliance. The banking apps delivered with Mary's assistance became the leaders in their markets and received widespread recognition.
Kuwait Times
05-05-2025
- Kuwait Times
Buffett to step down from Berkshire after 60 years at helm
WASHINGTON: Influential billionaire investor Warren Buffett said Saturday he would retire from leading his Berkshire Hathaway business group by the end of the year and that he would recommend his chosen successor Greg Abel take over. Buffett's success, coupled with his ability to explain his thinking in clear soundbites, has made him highly influential in the business and financial communities, earning him the nickname 'The Oracle of Omaha'. Buffett indicated several years ago 62-year-old Abel would be his pick for successor. 'The time has arrived where Greg should become the chief executive officer of the company at year end,' Buffett, 94, told an annual shareholder meeting in Omaha, the Midwestern city where Berkshire is based. Buffett said he believed the board of directors would be 'unanimously in favor of' his recommendation. 'I would still hang around and could conceivably be useful in a few cases, but the final word would be what Greg said in operations, in capital deployment, whatever it might be,' he added. Buffett transformed Berkshire Hathaway from a medium-sized textile company when he bought it in the 1960s into a giant conglomerate, now valued at more than $1 trillion and with liquid assets of $300 billion. The announcement prompted an outpouring of praise for Buffett from CEOs and investors. 'Warren Buffett represents everything that is good about American capitalism and America itself - investing in the growth of our nation and its businesses with integrity, optimism, and common sense,' said Jamie Dimon, CEO of JPMorgan Chase & Co. Tim Cook, chief executive of Apple, in a post on X said: 'There's never been someone like Warren, and countless people, myself included, have been inspired by his wisdom. It's been one of the great privileges of my life to know him.' Peter Cardillo of Spartan Capital Securities described Buffett as the 'Wizard of Wall Street' and said his announcement could come as a relief to those worried about succession. 'This helps alleviate concerns about who will replace him and may very well be well received by his followers,' Cardillo told AFP. The company on Saturday reported first-quarter profits of $9.6 billion, down 14 percent. That works out to $4.47 per share, also down sharply. And Buffett's net worth as of Saturday was $168.2 billion, according to Forbes magazine's real-time rich list. 'I have no intention — zero — of selling one share of Berkshire Hathaway. I will give it away eventually,' Buffett told shareholders, who responded with a standing ovation. 'The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg's management than mine. So that's the news hook for the day,' Buffett quipped. Abel, a long-time core figure of Berkshire, joined the group in the energy division in 1992 and has been on the board of directors since 2018. 'I couldn't be more humbled and honored to be part of Berkshire as we go forth,' Abel told shareholders. Asked during the meeting how his oversight of Berkshire's 189 operating businesses would differ from Buffett's, Abel said: 'More active, but hopefully in a very positive way.' 'Greg Abel and the rest of the team has huge shoes to fill, and they have immense amounts of cash to put to work if they so desire,' said Steve Sosnick of Interactive Brokers. 'This is truly the end of an era,' he added. Buffett earlier used the stage to declare that 'trade should not be a weapon', in remarks clearly targeting US President Donald Trump's aggressive use of tariffs against countries around the world. 'There is no question that trade can be an act of war,' he said, without mentioning Trump by name. Those comments came as analysts in the United States and abroad have expressed growing concern that tariffs could seriously slow global growth. Two months ago, Buffett told a CBS interviewer that tariffs 'are a tax on goods' — and not a relatively painless revenue-raiser, as Trump has suggested — adding, 'I mean, the Tooth Fairy doesn't pay 'em!' On Saturday Buffett urged Washington to continue trading with the rest of the world, saying, 'We should do what we do best and they should do what they do best.' Achieving prosperity is not a zero-sum game, with one country's successes meaning another's losses, he said. Both can prosper. 'I do think that the more prosperous the rest of the world becomes, it won't be at our expense. The more prosperous we'll become, and the safer we'll feel,' Buffett said. He added that it can be dangerous for one country to offend the rest of the world while claiming superiority. 'It's a big mistake, in my view, when you have seven and a half billion people that don't like you very well, and you got 300 million that are crowing in some way about how well they've done,' Buffett told shareholders. Compared to that dynamic, he said, the financial markets' recent gyrations are 'really nothing'. – Agencies
