NASHVILLE — Cryptocurrency is an important issue for community bankers, due to its popularity among younger customers and the hostility the sector has toward traditional finance, according to Brian Laverdure, senior vice president for the Independent Community Bankers of America.
Laverdure and Kevin Paintner, Wyoming regional president for Denver-based ANB Bank, provided an overview of the crypto sector March 12 during the third day of the ICBA’s annual convention.
Laverdure quoted Satoshi Nakamoto, the pseudonym attributed to the person or people who founded crypto in 2008: “What is needed is an electronic payment system based on proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
“From the very beginning, this was a system designed to exclude you, to replace you, to eliminate you,” Laverdure told the dozens of bankers attending the session. “Choose any synonym you want; this was the main purpose.”
Despite those differences, Paintner said the development of crypto changes the landscape of community banking, especially as younger customers who are comfortable with decentralized finance mature. “It is your customer, (they just haven’t) started walking in the door yet because they are not old enough,” he added.
Though crypto has been easy for bankers to dismiss, Laverdure said the sector includes trillions of dollars in revenue, and is primed for additional growth as the Trump administration supports the industry. President Donald Trump has signed an executive order establishing a Bitcoin reserve and digital asset stockpile. Interagency guidance issued two years ago established that banks seeking involvement in the crypto sector should secure a letter of non-objection. The Office of the Comptroller of the Currency rescinded that opinion last week.
The largest Political Action Committee during the election was crypto-focused and spent $250 million, including $42 million in Ohio where former Senate Banking Committee Chair Sherrod Brown (D-Ohio) was voted out of office. Paintner said big banks are gearing up for crypto: Though JPMorgan Chase CEO Jamie Dimon has criticized the crypto sector, his bank has one of the largest tokenization programs in the country.
“It’s here to stay,” Laverdure said of crypto. “It’s not going away.”
Paintner discussed the openness Wyoming has shown to crypto. The state launched its own stablecoin this year, making it the first state in the country with its own digital dollar. Paintner sees crypto as direct competition to banks. He said crypto supporters are blinded by unproven predictions of how much revenue crypto will bring in.
Several years ago, a Wyoming bill created a sponsored charter for digital assets. Introduced in 2018, the proposal was met with pushback from bankers in the state but supported by crypto advocates from around the world. Wyoming had an $800 million budget deficit at that time, and legalizing cannabis was portrayed as a way to bring billions of dollars into the state.
Laverdure said crypto should force bankers to consider what relationship banking means in a system without banks. He sees the “increasingly complex” algorithms used by crypto issuers as taking away the basic, relationship-focused roles filled by banks.
Laverdure said much of the challenge bank regulators face in establishing rules for the crypto sector is the fundamental differences between the sectors. A viable method has yet to emerge on the path forward for community banks, he said. “This is about trying to fit banking into crypto,” Laverdure said.