The US Patent and Trademark Office (USPTO) has awarded a patent to the proposed digital currency exchange system filed by the country’s second-biggest bank, Bank of America. The system will allow the conversion of one virtual currency into another automatically, with the exchange rate to be determined based on external data feeds.
Under the patent application, the proposed system would gather data from external information sources on the current virtual currency exchange rates and utilize the data to calculate its own optimal rate.
Part of the patent filing reads:
“Enterprises may handle a large number of financial transactions on a daily basis. As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to exchange currencies and cryptocurrencies.”
Brief details of the proposed cryptocurrency exchange system
Based on the patent documents, the system will be comprised of three accounts. The first account will be used by the customers of a business using the system, while the remaining two accounts will be utilized by the business itself.
The second account, which is called the “float account,” will serve as a holding area for the digital currency being sold by a customer. The third account, which is also a float account, will contain the equivalent amount of the virtual currency being sold by the customer. Upon completion of the transaction, the third account will then deposit the converted funds back into the original customer account for withdrawal.
The patented system also has the capability to assess the transactions for possible illegal trading activities. It will use such data as the amount of virtual currency being converted in order to calculate the risk score of a transaction. If the system determines that the transaction has high legal risks, it will cancel it.
Such move positions Bank of America ahead of its competition in the patent race as the bank has the most number of patent applications filing over nine patent applications in August.