Discover how the top crypto investment banks and firms are making big bets on crypto
Cryptocurrency and blockchain are no longer niche topics that only a few enthusiasts and innovators care about. They have become mainstream phenomena that attract the attention and interest of millions of people around the world, including some of the most influential and powerful institutions in the financial industry. According to Blockdata, an analytics company that tracks the blockchain and crypto space, 55% of the world’s top 100 banks by assets under management (AUM) have invested in cryptocurrency and/or blockchain-related companies, either directly or through subsidiaries. These crypto investments range from equity stakes, partnerships, and acquisitions, to launching their own products and services based on crypto and blockchain technology.
Some of the reasons why these banks are investing in crypto and blockchain are:
- To gain exposure to the fast-growing and lucrative crypto market, which has a total market capitalization of over US$2 trillion as of October 2021.
- To diversify their revenue streams and hedge against the risks of inflation, currency devaluation, and regulatory uncertainty.
- To enhance their operational efficiency, security, transparency, and innovation by leveraging the advantages of blockchain technology, such as immutability, decentralization, smart contracts, and tokenization.
- To meet the increasing demand and expectations of their 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 disrupted by new entrants and challengers in the fintech space.
Some of the examples of how these banks are investing in crypto and blockchain are:
Standard Chartered: The London-based bank leads the list of banks that have invested the most in crypto and blockchain companies, with US$380 million in valuation of the funding rounds in which it participated. Some of its investments include Ripple, a blockchain network that enables cross-border payments; Cobalt, a trading technology provider; Metaco, a digital asset custody platform; and Zodia, a joint venture with Northern Trust to offer institutional-grade crypto custody services.
BNY Mellon: The New York-based bank ranks second on the list, with US$321 million in valuation of the funding rounds in which it participated. Some of its investments include Fireblocks, a crypto custody and infrastructure platform; Pure Digital, an institutional-grade crypto 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 crypto custody and administration services to its clients by the end of 2021.
Citibank: The New York-based bank ranks third on the list, with US$279 million in valuation of the funding rounds in which it participated. Some of its investments include SETL, a blockchain-based settlement platform; Chainalysis, a blockchain analytics and compliance firm; R3, a blockchain software company; Coinbase, the largest crypto exchange in the US; and ErisX, a regulated crypto derivatives exchange. Citibank also launched Citi Global Digital Assets Group, a new unit that will focus on providing crypto-related products and services to its clients.
UBS: The Swiss banking giant ranks fourth on the list, with US$266 million in valuation of the funding rounds in which it participated. Some of its investments include Axoni, a blockchain-based capital markets infrastructure provider; Fnality International, a consortium that aims to create a digital cash system for wholesale banking; Securitize, a platform that enables tokenization of securities; and Nydig, a crypto asset management and custody firm. UBS also partnered with Clearmatics, a blockchain startup, to develop a digital currency called Utility Settlement Coin (USC).
J.P. Morgan Chase: The New York-based bank ranks fifth on the list, with US$224 million in valuation of the funding rounds in which it participated. 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 equity loans. J.P. 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 top banks are investing in crypto and blockchain companies. There are many other banks that are also active in this space, such as Goldman Sachs, Morgan Stanley, Barclays, HSBC, and more. These banks are not only investing in existing companies, but also creating their own ventures, products, and services based on crypto and blockchain technology. The increasing involvement of banks in the crypto and blockchain space indicates that these technologies are becoming more mature, accepted, and integrated into the mainstream financial system. This also creates more opportunities for innovation, collaboration, and adoption among various stakeholders in the industry. As more banks invest in crypto and blockchain, they will also face more challenges and risks, such as regulatory uncertainty, cybersecurity threats, and market volatility. Therefore, they will need to balance their strategic goals with their operational capabilities and risk management practices.
