In the next five to ten years, the bank expects blockchain infrastructure and tokenization to transform financial and nonfinancial infrastructure and markets.
The rally in risk assets persists, but digital assets have underperformed the Nasdaq stock index by 24% since the beginning of May after gaining 52% since the beginning of the year, according to a research report published by Bank of America (BAC) on Friday.
“Digital asset sentiment remains negative as U.S. Securities and Exchange Commission (SEC) enforcement actions create regulatory uncertainty and pressurize token prices,” analysts Alkesh Shah and Andrew Moss wrote, adding that “digital asset trading platforms are only a small part of the larger ecosystem.”
The regulator announced at the beginning of this month that it was filing a lawsuit against Binance, its founder Changpeng “CZ” Zhao, and the operating entity for Binance.US for allegedly violating federal securities laws. A day later, it filed a comparable lawsuit against rival exchange Coinbase.
The disproportionate focus on regulatory headwinds, the approval of spot bitcoin exchange-traded funds (ETFs) in the United States, and illicit activity, according to Bank of America, is “overshadowing the rapid development and integration of distributed ledger and blockchain technology infrastructure.”
“Specifically private permissioned distributed ledgers and blockchain subnets,” which facilitate the tokenization of traditional financial assets, were cited in the report.
The bank predicts that blockchain infrastructure and tokenization will “transform financial and non-financial infrastructure and markets within the next five to ten years.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.