Breaking News: Bank of America Patent on Cryptocurrency Based Remittances

The US Patent & Trademark Office website revealed that Bank of America had filed a patent on a 'System and Method for Wire Transfers Using Cryptocurrency'. The post shows that the patent was filed on Mar. 17th, 2014 and published on Sept. 17th, 2015. This explains the relatively low profile BoFA has kept when it came to discussing Bitcoin and cryptocurrencies in public.

The patent deals with using a system that would decide on one optimal method for completing a wire transfer, in other words: remittance of money. The system in this process would use multiple cryptocurrency exchanges, wherein a funds transfer initiated by one customer could be exchanged via one cryptocurrency exchange, and at the receiving end they could be re-converted to currency using another cryptocurrency exchange. The different cryptocurrency exchanges that they have mentioned include: OKCoin, BitStamp, BTCChina, Cryptsy, CoinMarket, Justcoin. However, they also mention that this list is not exhaustive. Similarly, the different cryptocurrencies that the filing has referred to are: Bitcoin, Litecoin, Ripple, Peercoin, and Dogecoin. They also included MintChip, a digital currency concept backed by the Government of Canada.

The concept sounds somewhat similar to what Ripple Labs or Stellar have built for enabling cross-border money transfers. Cryptocurrencies help reduce cost at the aggregation and dis-aggregation end points in the remittance network. Though there have been rumors about BofA showing interest in blockchain earlier, the first use case appeared when mishandling of records was found to be an area where blockchain could be utilized. BoFA has officially always remained off the hook.

It was only in Dec. 2014, that David Woo, Head of Global Interest Rates and Currencies Research at Bank of America, stated the following "I think we have to separate Bitcoin as an investment versus Bitcoin as a payment system. I think as an investment, as a store of value, it has limited upside, especially in an environment in which the dollar is going up and gold is going down, the safe havens people are using to run away from the dollar are going down"

The patent that was published last week provides us with the knowledge that BofA had for a long time been investing in understanding the cryptocurrecny system for usage within the banking infrastructure and was not interested in the currency itself like many other financial institutions.

This could also be a reason behind BofA not being part of the 9 major banks' consortium (Goldman Sachs, JPMorgan, Credit Suisse, Barclays, Commonwealth Bank of Australia, State Street, RBS, BBVA and UBS) partnering with R3CEV, a New York-based group of trading and technology executives, to back blockchain technology use in financial services. They could well be leveraging their in-house expertise in developing their own proprietary products based on this technology.