Tech
Major cryptocurrency investment companies/banks are making big bets on cryptocurrencies
Find out how major banks and cryptocurrency investment firms are making big bets on cryptocurrencies
Cryptocurrency and blockchain are no longer niche topics that interest only a few enthusiasts and innovators. They have become mainstream phenomena attracting the attention and interest of millions of people around the world, including some of the most influential and powerful institutions in the financial sector. According to Blockdata, an analytics firm that tracks the blockchain and crypto space, 55% of the world’s top 100 banks by assets under management (AUM) have invested in cryptocurrencies and/or blockchain-related companies, either directly or through subsidiaries. These investments in cryptocurrencies they range from equity investments, partnerships and acquisitions, to the launch of their own products and services based on cryptographic and blockchain technology.
Some of the reasons why these banks are investing in cryptocurrencies and blockchain are:
- To gain exposure to the lucrative and rapidly growing cryptocurrency market, which has a total market capitalization of over $2 trillion as of October 2021.
- To diversify your revenue streams and protect against the risks of inflation, currency devaluation and regulatory uncertainty.
- Improve operational efficiency, security, transparency and innovation by leveraging the benefits of blockchain technologysuch as immutability, decentralization, smart contracts and tokenization.
- To meet the growing demand and expectations of its customers, especially the younger and tech-savvy generations, who prefer more accessible, convenient and flexible financial solutions.
- To stay ahead of the competition and avoid being disturbed by new entrants and challengers in the fintech sector.
Some of the examples of how these banks are investing in cryptocurrencies and blockchain are:
Standard Charters: The London-based bank tops the list of banks that have invested the most in cryptocurrency and blockchain companies, with $380 million in valuation from funding rounds it has participated in. Some of its investments include Ripple, a blockchain network that enables cross-border payments; Cobalt, A commercial technology supplier; Metaco, a digital asset custody platform; and Zodia, a joint venture with Northern Trust to offer institutional-grade cryptocurrency custody services.
BNY Mellon: The New York-based bank is second on the list, with $321 million in valuation from funding rounds it has participated in. Some of its investments include Fireblocks, a cryptocurrency custody and infrastructure platform; Pure Digital, an institutional-grade cryptocurrency trading platform; Securrency, a blockchain-based financial services provider; and Bitwise Asset Management, a crypto index fund manager. BNY Mellon also announced that it will offer cryptocurrency custody and administration services to its customers by the end of 2021.
City Bank: The New York-based bank ranks third on the list, with $279 million in valuation from financing rounds it has participated in. Some of its investments include SETL, a blockchain-based settlement platform; Chainalysis, a blockchain analytics and compliance company; R3, a blockchain software company; Coinbase, the largest cryptocurrency exchange in the United States; and ErisX, a regulated crypto derivatives exchange. Citibank also launched Citi Global Digital Assets Group, a new unit that will focus on providing cryptocurrency-related products and services to its clients.
UBS: The Swiss banking giant is fourth on the list, with a $266 million valuation from the financing rounds it has participated in. Some of its investments include Axoni, a blockchain-based capital markets infrastructure provider; Fnality International, a consortium aiming to create a digital cash system for wholesale banks; Securitize, a platform that allows the tokenization of securities; and Nydig, a cryptocurrency management and custody company. UBS has also partnered with Clearmatics, a blockchain startup, to develop a digital currency called Utility Settlement Coin (USC).
JP Morgan Chase: The New York-based bank ranks fifth on the list, with $224 million in valuation from funding rounds it has participated in. Some of its investments include ConsenSys, a blockchain software company; Digital Asset Holdings, a distributed ledger technology provider; Blockdaemon, a blockchain node infrastructure platform; and Figure Technologies, a fintech company that uses blockchain to provide home loans. JP Morgan Chase also launched JPM Coin, a digital currency for interbank payments; and Onyx, a new business unit dedicated to blockchain and digital assets.
These are just some of the examples of how major banks invest in cryptocurrency and blockchain companies. There are many other banks active in this space, such as Goldman Sachs, Morgan Stanley, Barclays, HSBC and others. These banks not only invest in existing companies, but also create their own ventures, products and services based on crypto and blockchain technology. The growing involvement of banks in the cryptocurrency and blockchain sector indicates that these technologies are becoming more mature, accepted and integrated into the traditional financial system. This also creates greater opportunities for innovation, collaboration and adoption among various industry stakeholders. As more banks invest in cryptocurrencies and blockchain, they will also face greater challenges and risks, such as regulatory uncertainty, cybersecurity threats and market volatility. Therefore, they will need to balance their strategic objectives with their operational capabilities and risk management practices.
Disclaimer: Analytics Insight does not provide financial advice or guidance. Please also note that the cryptocurrencies mentioned/listed on the
they could potentially be scams, i.e. designed to induce people to invest financial resources that could be lost forever and no longer recoverable once the investments have been made. You are responsible for conducting your own research (DYOR) before making any investment.