Wells Fargo plans to offer a cryptocurrency investment product for its wealthy clients, the San Francisco-based bank announced Wednesday.
"Cryptocurrencies have gained stability and viability as assets, but the risks lead us to favor investment exposure only for qualified investors, and even then through professionally managed funds," the bank’s investment institute wrote in a report titled "The investment rationale for cryptocurrencies." Wells Fargo Investment Institute, which oversees nearly $2 trillion in assets, plans to launch its cryptocurrency investment platform for qualified investors by mid-June, according to Cointelegraph.
The bank’s decision to wade into the cryptocurrency market follows similar moves made by other large institutions such as JPMorgan Chase, BNY Mellon and Citi, and comes as the nation’s top bank regulator has indicated it plans to review past crypto-friendly actions.
Much like cryptocurrency’s fluctuation in value, the status of digital assets in the financial services landscape has long been volatile.
Some banks, fearing digital assets' potential to be linked to money laundering and nefarious financing, have remained wary of entering the space. Others, taking notice of crypto’s rising popularity, have cautiously evolved their approach.
JPMorgan Chase CEO Jamie Dimon in 2017 famously called Bitcoin "a fraud" and asserted he would fire "in a second" anyone at his bank found to be trading in that currency. Three years later, however, the company began extending its banking services to crypto exchanges Coinbase and Gemini.
BNY Mellon in February announced it will hold, transfer and issue cryptocurrencies on behalf of its asset-management clients — a capability it plans to roll out this year, pending further evaluations and approvals.
Goldman Sachs, which once called digital assets "unsuitable" investments for clients, announced in March that it would relaunch its crypto trading desk. The bank first launched the desk in 2018, then halted it later that year as Bitcoin prices fell 80% from their 2017 spike.
This month, Itay Tuchman, Citi’s global head of foreign exchange, told the Financial Times the New York City-based bank is weighing offering its clients cryptocurrency trading, custody and financing options — but is proceeding with caution.
"We shouldn’t do anything that’s not safe and sound," Tuchman said. "We will jump in when we are confident that we can build something that benefits clients and that regulators can support."
On the regulatory side, the sector has made several key advances in the past year, due to a series of crypto-friendly stances taken under former Acting Comptroller Brian Brooks.
Under Brooks' leadership, the Office of the Comptroller of the Currency issued guidance regarding banks' use of stablecoins and blockchains, as well as an interpretive letter clarifying that national banks are allowed to provide cryptocurrency custody services.
The agency’s new acting comptroller, Michael Hsu, however, has indicated he will take a more measured approach to how the OCC regulates crypto and cryptocurrency firms, telling the House Financial Services Committee on Wednesday he plans to review the agency’s past actions regarding the space.
The OCC’s conditional approval of crypto firms has also caught the attention of Senate Banking Committee Chair Sherrod Brown, D-OH, who asked Hsu to reassess the conditional national trust charters and halt the approval of any additional charters to nonbank entities.
"[G]iven the many uncertainties present in the digital asset landscape as identified by other regulators, the volatility of digital asset valuations, and the disproportionate influence individuals can have on entire cryptocurrency markets, the OCC is not in a position to regulate these entities comparably to traditional banks," he wrote in a letter to Hsu on Wednesday.
Brown said it is "unclear" whether the regulator engaged in the appropriate due diligence before granting the charters.