SPECIAL EDITION • THE NEXT NORMAL
Banking on Crypto?
Minimizing the Risks of Crypto Product Offerings By Justin C. Steffen, Barack Ferrazzano Kirschbaum & Nagelberg LLP
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ith escalating prices and newfound public adoption, banks and other financial institutions are beginning to take note of cryptocurrencies. An estimated 14% of the U.S. population owns cryptocurrency, and PayPal, U.S. Bank, and Morgan Stanley have all recently launched crypto products. Although the same rules and regulations that apply to other investments may apply to cryptocurrencies, this new(ish) asset class presents unique obstacles of which new industry participants must be aware. Indeed, in a rush to appease customers, today’s shortcuts may prove to be tomorrow’s legal nightmares. Banks, therefore, must learn to engage crypto with caution.
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• July-August 2021
A Brief Introduction to Cryptocurrencies
Bitcoin is the seminal cryptocurrency – a digital or virtual currency. Often compared to a form of digital gold, Bitcoin prices have skyrocketed in the last year, trading at over $60,000 at multiple points in recent weeks. Bitcoin was first described in a 2008 whitepaper by a person (or persons) using the pseudonym Satoshi Nakamoto. Nakamoto’s Bitcoin uses public and private key cryptography and hashing to create a secure form of digital currency. Nakamoto’s whitepaper described both Bitcoin and the
