The world of finance is constantly evolving, and the latest trend that has caught the attention of Wall Street institutions is the rise of crypto. Despite the many challenges and controversies that have plagued the industry, major players in the financial sector are not deterred and are actively seeking ways to expand their reach into this new digital frontier.
From BNY Mellon to BlackRock, Fidelity Investments, and even Goldman Sachs, these institutions are betting that the future of finance lies in blockchain technology, tokenization, and crypto custody. With regulators becoming increasingly tough on exposure, the cost of doing business in this space is going up, but that has not deterred these institutions from pushing forward with their plans.
The crypto winter may be far from over, but for these institutions, the transformative potential of the crypto world is too great to ignore.
Wall Street Institutions Bet Big on Crypto
The world’s largest asset manager, BlackRock, has plans to continue exploring the use of digital assets in capital markets offerings and is focusing on four key areas: stablecoins, permissioned blockchain, tokenization, and crypto assets. Last year, BlackRock entered into a partnership with Coinbase Global to make it easier for institutional investors to manage and trade Bitcoin.
Goldman Sachs has launched a digital assets platform with hopes that clients will use the technology to issue financial securities in the form of digital assets. The firm helped the European Investment Bank issue a digital bond last year using blockchain technology, which resulted in a faster settlement process. Goldman also has a team of traders who deal in cash-settled crypto derivatives for clients.
JPMorgan Chase & Co. CEO Jamie Dimon has been a long-time critic of cryptocurrencies, but the bank has been actively developing blockchain-based systems to run traditional financial transactions. JPMorgan is running several projects from its blockchain division, Onyx, including a payment network for banks and a platform to tokenize traditional assets.
Fidelity Investments is planning to expand the types of assets it offers custody for beyond Bitcoin and Ether. The firm will explore offerings around asset staking and lending, according to the Head of Institutional at Fidelity Digital Assets, Chris Tyrer. Fidelity is continuing its push into the crypto market and has set a goal of hiring an additional 100 people in the division, with a target of 500 by the end of the first quarter.
It Won’t Be Easy
Still, there are significant hurdles that Wall Street institutions will face in their attempts to invest in the crypto world. Regulators will likely become stricter with increased exposure, and with the current economic downturn, banks are under pressure to cut costs, which may result in scaled-back ambitions.
The recent plunge in crypto prices and valuations may not help to rekindle investor demand, although a recent rebound in token prices may signal the worst of the recent chaos is over.