Digital asset sentiment remains poor as the U.S. Securities and Exchange Commission’s (SEC) enforcement actions create regulatory uncertainty, pressuring token prices, Bank of America (BAC) said in a Friday research report. Despite this, the bank expects blockchain infrastructure and tokenization to transform financial and non-financing infrastructure and markets over the next five to 10 years.
Since the beginning of May, digital assets have underperformed the Nasdaq stock index by 24%, after gaining 52% from the start of the year. The SEC has recently taken action against exchanges Binance and Coinbase, creating further regulatory uncertainty. However, Bank of America believes that an excessive focus on regulatory headwinds, spot bitcoin exchange-traded-fund (ETF) approval in the U.S. and illicit activity is overshadowing the rapid development and integration of distributed ledger and blockchain technology infrastructure.
The bank believes that private permissioned distributed ledgers and blockchain subnets will enable the tokenization of traditional financial assets, and that this will transform financial and non-financing infrastructure and markets over the next five to 10 years.