According to a survey by Blockdata, more than half of the world’s top 100 banks have majorly invested in crypto, digital assets and blockchain technology platforms.

Over the last few years the popularity of Bitcoin has skyrocketed in value and new cryptocurrencies are entering the space almost each and every day. Governments and central banks may not have made up their minds yet about cryptocurrencies but private banks are growing on rapidly in crypto and blockchain technology.

A blockchain market analysist, Blockdata found in a research that among the most active backers of crypto and blockchain platforms, Citi group, Goldman Sachs, Barclays, JP Morgan and BNP Paribas are the top investors in the blockchain market’s relay race. Standard Chartered has invested $380M so far, followed by BNY Mellon at $321M, and Citi bank at $279M.

The report also suggested, 55% among the 100 high ranked banks (mostly private) by AUM (Assets Under Management) are taking interest in the crypto market.

Where the banks are investing the most?

The research also denotes crypto custody as a main focus point for banks betting high on the crypto universe. Nearly, 23 of the top 100 banks are either developing crypto custody solutions or backing start-ups that provide custodial services for digital assets.

Banking institutions have offered custodial services for a long time including gold or cash deposits, DEMAT accounts, and management of other securities. Custodian solutions provide financial services to look after their clients’ funds, for a fee. They either build their own technology to provide this service, or use a technology provider whose solutions they can integrate into their own systems.

Why the top banks have started providing cryptocurrency and Bitcoin related services?

Witnessing the bigger cryptocurrency exchanges with a section of their staff become considerably more lucrative or valuable than other banks. This started in 2018 when the leading exchange at the time, Binance recorded $54 million more profit than Deutsche Bank, with just 200 vs 100k employees. And recently, Coinbase’s valuation was higher than Goldman Sachs, with just 4% of their employees.

Among the other two developments that convinced the top banks to invest is, in 2020 a change in regulations took place, allowing banks to provide crypto custody solutions. There have been countless requests from their clients to offer Bitcoin solutions.

For more opportunity in near future, these banks globally have doubled down on their investments to further help adopting blockchain technology. Though it has to be acknowledged that more people would own digital assets if they could do so through their existing banks.

Joyashree Dey

CBW - External Analyst

INDIA