We are living in a period of great change. The events of recent years, including the pandemic, the need to process and protect huge amounts of data and other new trends, have prompted the need for new approaches. Blockchain is one of the promising technologies. Being a curiosity, just a few years ago, blockchain technologies and cryptocurrencies began to enter everyday life at fast pace. Many companies are increasingly using these advanced approaches as the cornerstone of their business operations.
Being at the forefront of blockchain technology, we at Lider Coin Project offer our clients and readers a small overview of the current trends in blockchain and cryptocurrency usage by the world’s largest financial institutions.
It can be seen from the report that some banks are starting to build their main strategy around blockchain technologies and cryptocurrencies, some are introducing them as part of their offerings to their clients, and some prefer to remain conservative and watch developments for now.
However, it is becoming apparent that they are all attentive to these technologies and devote significant resources to researching the trends.
- Having first introduced the possibilities of working with cryptocurrency back in 2018, this year it is time for Goldman to return to the game.
Managed in London by Matthew McDermott, the bank’s head of digital assets, the department primarily deals with CME bitcoin futures and contracts for institutional clients. It also provides clients with regular research and industry intelligence.
McDermott told Financial News in March that the bank may consider buying, selling and holding cryptocurrencies as soon as regulators permit. His team is working on projects in the areas of enterprise blockchain, digital transactions and digital wallets.
At the same time, Goldman currently prefers not to develop its own blockchain technology, preferring to work with external providers such as those developed by R3 and Consensys.
- Last year, JPMorgan focused primarily on blockchain when developing digital assets, launching a blockchain technology unit in October.
JPMorgan has an Onyx division with over 100 employees. Its two main offerings to date include JPM Coin, the bank’s own token, and a blockchain-based interbank payment network called Liink.
When it comes to cryptocurrencies, JPMorgan is more conservative. While the bank’s analysts are optimistic about Bitcoin compared to the rest of the sector, CEO Jamie Dimon has remained relatively calm about the matter after rejecting Bitcoin over a perceived risk of fraud four years ago.
The bank is looking into a Bitcoin fund for its private clients, due to launch in the summer of
- While analysts at the bank have previously stated the benefits of cryptocurrencies, Citigroup is cautious about the sector.
The head of the bank’s international currency department, Itay Tuchman, recently announced that last month, the bank began to study the possibility of trading, storing and financing cryptocurrency, but there was no final decision on whether such access would be provided to customers.
“We shouldn’t do anything unsafe. We will participate when we are confident that we can create something that will benefit customers and that regulators can support it” — Tuchman told The Financial Times.
- BNY Mellon opens a new digital assets division and plans to offer integrated services to customers.
In February, the investment bank said it was developing a customer-centric approach that «aims to become the industry’s first digital platform for storing and administering multiple assets» for cryptocurrencies.
- HSBC has been one of the major critics of cryptocurrencies in recent months, despite the bank’s rivals making strides in the sector.
The head of the bank, Noel Quinn, said earlier this month that the volatility and opacity of cryptocurrencies are keeping HSBC from entering the industry. The bank does not plan to launch a trading platform or offer its clients its cryptocurrency services.
“Given the volatility, we do not treat bitcoin as an asset class, and if our clients want to be there, then of course they can, but we are not promoting it as an asset class as part of our asset management business,” said Quinn in interview to Reuters.
However, despite these claims, since early 2020 HSBC has been developing a blockchain-based Digital Vault platform using open source technology from R3. The storage platform will provide investors with access to securities records and will contain more than a third of HSBC’s own assets. An HSBC spokesman told Financial News in February that the bank expects to move recurring transactions online from the first quarter of 2021, after investing about $ 5.8 billion in blockchain technology in 2020.
- Barclays is another one of a handful of large banks that have opposed cryptocurrencies as investments and have said little about the sector since the boom started last year.
In a rare statement released in January, Barclays’ private banking division said it considers bitcoin «almost non-investable» because bitcoin investments are extremely volatile and do not offer much diversification benefits for large investors.
At the same time, in the report for 2019, the bank said that it had begun to study options for using the blockchain, but had not yet disclosed additional details.
- While the bank does not yet offer clients access to cryptocurrencies, UBS has made significant strides in developing a private cryptocurrency.
Under an initiative called Fnality, lenders including UBS, Santander and Lloyds Banking Group are developing a token for use in international transactions. The Fnality platform recently filed an application with the Bank of England to consider accessing potential settlement structures as part of the central bank’s digital currency engagement with the UK Treasury.
In 2019, UBS announced that it would lead a consortium of lenders to launch a blockchainbased trading platform called we.trade.
Equally important, other users of the UBS platform include Société Générale, Caixa Bank, HSBC, Santander, UniCredit, Nordea, KBC, Rabobank and Deutsche Bank, which use we.trade to settle international transactions.
We.trade offers services such as bank payment guarantees using the blockchain to facilitate secure transactions between participating banks using the platform.
- Deutsche Bank does not currently offer cryptocurrency related services to its clients, with the bank’s investment and research team investigating the sector.
The bank’s chief investment officer, Christian Nolting, said in April that bitcoin «will stay with us» but is far from becoming a mainstream asset class. Deutsche advises clients to treat cryptocurrencies with caution, adding that the future of these assets is uncertain while prices remain volatile.
Deutsche analyst Marion Labouré recently stated that the value of bitcoin is «wholly based on wishful thinking» and has gone from being a trendy investment to being «tasteless.»
Labouré has likened the rise of cryptocurrency to the Tinkerbell Effect, an economic term based on Peter Pan’s assertion that Tinkerbell existed simply because children believed in it.
- Standard Chartered intends to go to the forefront and lead institutional cryptocurrency trading among large investment banks, announcing plans to develop a crypto exchange in early June.
As part of a joint venture with Hong Kong-based BC Group, the bank will offer UK and European institutional and corporate clients access to a variety of cryptocurrencies through a brokerage and digital asset exchange platform.
“We are firmly convinced that digital assets are not going anywhere and will be accepted by the institutional market as a relevant asset class,” said Alex Manson, head of the bank’s innovation projects division.
- Morgan Stanley joined current cryptocurrency trends in March this year after plans emerged to create three bitcoin-related funds.
The instruments offered to US investors, are the two funds that will be provided by Galaxy Digital, and the third will be an exclusive joint effort of FS Investments and NYDIG. The minimum entry level for the three funds ranges from USD $ 25,000 to USD $ 5 million and requires clients to already have accounts with Morgan Stanley.