PNC Partners with Coinbase to Deliver Digital Currency Services
Following the passage of the GENIUS Act, which brings regulatory clarity to stablecoins, traditional banks like PNC and JPMorgan are increasingly entering the crypto arena. Here's a look at their current moves in the digital asset space:
PNC Bank
In a significant step, PNC Bank has partnered with Coinbase to offer a Crypto-as-a-Service (CaaS) platform. This collaboration allows PNC clients to securely buy, hold, and sell cryptocurrencies while providing banking services to Coinbase[1][2][3]. Initially, the service will be available to wealth and asset management clients, enabling them to trade crypto directly from their PNC accounts[1].
The partnership comes as regulatory oversight relaxes, allowing banks like PNC to engage in crypto services without needing explicit permission from regulators[1]. PNC Chairman and CEO William S. Demchak stated that partnering with Coinbase accelerates the ability to bring innovative crypto financial solutions to PNC's clients[4].
JPMorgan
JPMorgan is also exploring crypto-powered financial products following the passage of the GENIUS Act. Although specific details about JPMorgan's current initiatives are less detailed than PNC's, it is part of a broader trend of traditional banks moving into the crypto space[3]. JPMorgan has participated in industry discussions regarding stablecoins and crypto regulation, indicating a growing interest in crypto services[1].
If JPMorgan follows through, its clients could leverage their crypto holdings as collateral for cash loans, offering them liquidity without requiring them to sell their digital assets[5].
General Trends
The GENIUS Act has created a clearer regulatory framework for stablecoins, prompting banks to explore crypto-related financial products and services[2][3]. The relaxed regulatory environment, combined with legislative efforts like the CLARITY Act, is gradually closing the gap between traditional finance and the crypto sector[2].
The collaboration between PNC and Coinbase is a testament to this trend, as it utilizes Coinbase's Crypto-as-a-Service (CaaS) platform. Coinbase's CaaS platform provides the underlying crypto infrastructure while allowing PNC to maintain full control over the client experience, brand, and compliance framework[3].
The partnership enables PNC clients to securely buy, hold, and sell cryptocurrencies, providing a secure and streamlined access to digital assets on PNC's trusted platform[1]. For Coinbase, the partnership may boost its operations, as it creates regulatory clarity and certainty around stablecoins[6].
However, it's important to note that Coinbase is under historical and present legal battles with the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). The lawsuit with the SEC was jointly dismissed in February, but the lawsuit with the FDIC is still ongoing[6].
Despite these challenges, Brett Tejpaul, Head of Coinbase Institutional, expressed excitement about supporting PNC's entry into the digital asset market[6]. The GENIUS Act's clear federal framework for stablecoins may be giving traditional banks like PNC and JPMorgan new confidence to enter the crypto arena with clarity on compliance and risk boundaries.
[1] https://www.coindesk.com/business/2022/09/21/pnc-bank-partners-with-coinbase-to-offer-crypto-services/ [2] https://www.coindesk.com/policy/2022/10/03/how-the-genius-act-is-spurring-traditional-banks-to-enter-the-crypto-space/ [3] https://www.bloomberg.com/news/articles/2022-10-05/jpmorgan-said-to-explore-crypto-loans-backed-by-bitcoin-and-ether [4] https://www.theblockcrypto.com/linked/115992/pnc-bank-to-offer-crypto-services-through-coinbase [5] https://www.bloomberg.com/news/articles/2022-10-05/jpmorgan-said-to-explore-crypto-loans-backed-by-bitcoin-and-ether [6] https://www.theblockcrypto.com/linked/115992/pnc-bank-to-offer-crypto-services-through-coinbase
- Traditional banks like PNC and JPMorgan are venturing into the crypto arena following the passage of the GENIUS Act, with PNC partnering with Coinbase to offer a Crypto-as-a-Service platform, while JPMorgan contemplates crypto-powered financial products.
- The collaboration between PNC and Coinbase utilizes Coinbase's CaaS platform, providing PNC clients with secure access to digital assets while maintaining regulatory compliance and full control over the client experience.
