The evolution brought by cryptocurrencies has now reached the financial industry. Banks realised that they were missing out on the entire new economy and are trying to get hold of it.
When cryptocurrency first appeared as a new asset class, the financial industry rejected and criticised it. From their point of view, one of the main reasons for avoiding these assets was the concept of decentralization, which eliminates the need to move money via a bank. However, as soon as people started investing in digital currencies and DeFi became popular, these banking firms changed their stance on cryptocurrency.
Some of the world's largest and most powerful financial institutions have worked relentlessly to attract cryptocurrency expertise in recent years. This growing demand from clients forced them to work on crypto-related services. They are engaging with the crypto offers, pitching investments in cryptocurrency, and some are starting their own digital currency—all to get control over this crypto realm despite the current market turmoil.
Let’s take a look at the top and renowned banks entering crypto and the services they are providing in the crypto world.
America’s banking giant and the world’s largest bank by market capitalization have made many efforts to get on board with crypto adoption. In February 2019, it launched JPM Coin, a digital token that will be used to settle transactions between clients of its wholesale payments business. It would be the first cryptocurrency issued by a U.S. bank.
Since then, JPMorgan has been actively making enhancements in the field of blockchain and cryptocurrencies. It also entered the Metaverse and soon became the largest bank there too. Their latest trial with the technology in the trade of traditional financial assets was in May 2022, when JPMorgan Chase employed blockchain for collateral settlements.
Another America-based multinational investment bank is now investing vigorously in Crypto-space. There have been times when Goldman has not supported cryptocurrency. It first rejected considering cryptocurrency as an asset class, but later changed its mind. In May 2021, it presented a detailed report on crypto and discussed the potential of digital currencies as an institutional asset class by interacting with several crypto and financial experts.
Recently, it has invested in many crypto and blockchain-based companies, including CertiK, Coin Metrics, Blackdaemon, and Elwood. It was also a member of Anchorage Digital's $350 million Series D funding round, alongside Alameda Research, Andreessen Horowitz, and Kraken.
The world’s largest custodian bank, this security services company is constantly supporting crypto-related technologies. In February 2021, they became the first global bank to announce an integrated service for digital assets. It is developing a safe and integrated digital asset service platform that will enable interoperability between its clients' traditional and digital assets.
It has put in around $690 million in three rounds of funding. Talos (a digital asset trading infrastructure provider), Coin Metrics (a blockchain analytics firm), and Fireblocks participated in these rounds (an institutionally focused crypto custodian servicing company).
Conversely, Standard Chartered, a British multinational banking company, showed its interest in this space last year through research coverage of crypto assets. The bank acknowledges that cryptocurrencies have established a new ecosystem that fiat currencies cannot replace.
They have some popular investments, including Ripple(XRP), one of the market's leading cryptocurrencies. It's also an investor in Cobalt, which provides trading technology for FX and digital assets. It has also entered the Metaverse by acquiring virtual land in the Metaverse.
Morgan Stanley was the first US bank to provide access to Bitcoin assets to its clients. In March 2021, the bank stated that it would be opening access to three funds for Bitcoin owners. However, Morgan Stanley only allows its richer clients to access such a risky asset.
It is now at the top of the list of banks investing in crypto and blockchain-related technology. The bank's most recent rounds of fundraising include new investment in NYDIG as well as a new investment in Figment, a blockchain infrastructure and services provider.
Citibank is constantly working towards the adoption of crypto and has given a blueprint for businesses considering embracing cryptocurrency payments or merely using such assets as a store of value, stressing that businesses should carefully assess which digital currency they want to use for payments and transactions.
Citigroup has been expanding its crypto investments, sponsoring nine different firms in 2021 and another six companies by May 2022. It has invested in crypto and blockchain companies such as SETL, Talos, TRM, Contour, Blockdaemon, and Amberdata between August 2021 and May 2022. It also led to the $15 million Series A fundraising for Amberdata, a Palo Alto, California-based digital asset data startup.
The Commonwealth Bank of Australia(CBA) invested an estimated $421 million in four distinct cryptocurrency and blockchain companies. This includes investments in Lygon, a blockchain banking firm, and Gemini, a cryptocurrency exchange. CBA intends to include Gemini's technology as well, allowing clients to purchase, sell, and exchange digital assets using its smartphone app.
After witnessing so many banks take things so intensely, you can sense a massive transformation occurring. Almost every bank is employing similar strategies and investing hundreds of millions in providing crypto-related services. However, this is not the end of the list of banks that have joined the crypto and blockchain industry. There are several others, including Wells Fargo, UBS, BNP Paribas, and Barclays.
As the gap between the digital world and traditional finance is narrowing by the day, the conditions are changing as compared to the last few years. Ironically, representatives of the banking sector now argue that authorities have not responded swiftly enough, costing banks significant time in their effort to provide services, rather than cautioning them to stay away from cryptocurrencies.
Large banks and corporations are delving into the realm of Crypto. With rapid employment growth and thousands of new jobs in recent years, it appears that even the greatest names in banking feel that cryptocurrency is more than a fleeting craze.