Crypto Regulations Uncertainty Hinders Blockchain Growth: BOA

While the rally in risky investments persists, digital assets have underperformed the Nasdaq stock index by 24% since the beginning of May, according to a research report published by Bank of America (BOA) on Friday. This is because digital assets have increased by 52% since the beginning of the year.

According to the report, the negative sentiment towards digital assets results from regulatory uncertainty resulting from enforcement actions taken by the U.S. Securities and Exchange Commission (SEC), which has placed pressure on token prices. Alkesh Shah and Andrew Moss, analysts at Bank of America, emphasize that digital asset trading platforms are only one component of the ecosystem as a whole.

Earlier this month, the SEC filed lawsuits against Binance, its founder Changpeng “CZ” Zhao, and Binance.US, alleging violations of federal securities laws. The SEC filed a similar lawsuit against rival exchange Coinbase a day later.

According to Bank of America, the disproportionate focus on regulatory challenges, the approval of spot bitcoin exchange-traded funds (ETFs) in the U.S., and illegal activities are obscuring the rapid development and integration of distributed ledger and blockchain technology infrastructure. The report highlights the importance of private permissioned distributed ledgers and blockchain subnets that facilitate the tokenization of traditional financial assets.

Within the next five to ten years, the bank anticipates that blockchain infrastructure and tokenization will radically alter both financial and non-financial infrastructure and markets.