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The transformative potential of crypto and blockchain is 'difficult to overstate,' Bank of America says in its debut report on the sector

Bank of America. Smith Collection/Gado/Getty Images Bank of America launched coverage on digital assets to make sense of a rapidly growing asset class. The report - "Digital Assets Primer: Only the first inning" - was led by BofA's head of global crypto and digital asset strategy. "It's difficult to overstate how transformative blockchain technology ... could potentially be," said Alkesh Shah. Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bank of America began coverage of digital assets Monday, analyzing what it said was a revolutionary asset class that has now ballooned to $2.1 trillion.

The report, entitled "Digital Assets Primer: Only the first inning," was led by Alkesh Shah, head of global cryptocurrency and digital asset strategy. He said the industry - currently larger than the GDP of Italy or Canada - is simply "too large to ignore."

BofA estimated about 221 million users have traded a cryptocurrency or used a blockchain-based application in June this year. Meanwhile, digital asset-related venture capital funding jumped to $17 billion in the first half of 2021 compared to just $5.5 billion in the whole of last year. Mergers and acquisitions jumped to $4.2 billion year-to-date, up from $940 million in 2020 and $2.5 billion in 2019.

But more than its size, the cryptocurrency sector's underlying technology has massive potential for change, analysts said.

"It's difficult to overstate how transformative blockchain technology, digital assets, and the thousands of decentralized apps that have yet to be created could potentially be," according to the report.

For example, innovations like decentralized applications, stablecoins pegged to fiat currencies, central bank digital currencies, and non-fungible tokens will significantly spur the growth of the space, which should see increased institutional participation and mainstream adoption.

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