Start Fiat Banks Institutionals change thoughts: New banks announce crypto-services

Institutionals change thoughts: New banks announce crypto-services


Many are still aware of the negative statements of many major banks on the subject of Bitcoin and crypto currencies, which a few years ago still predicted, that these were only a temporary hype and would quickly disappear again. Increasingly, however, the opinions of the same people who rejected crypto currencies in the past, are changing. We can see from the following examples, among others, that the institutional interest in blockchain technology is growing continuously.

BlackRock indirectly holds Bitcoin

One of the most polasizing news of the last few days was the 250 million dollar – investment of the business intelligence company MicroStrategy. With this investment, the company has selected Bitcoin as its primary reserve asset. CEO Michael J. Saylor, who said in 2013:

“Bitcoin’s days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.”

sees Bitcoin today as a significant addition to the global financial system with useful features for institutionals and individuals. But these news show also other positive signs.
MicroStrategy’s largest shareholder is BlackRock, a nearly 90 billion dollar investment group. This allows the company to indirectly invest in Bitcoin.

Richard Turnill, the head of BlackRock said even back in 2018:

„We see, that crypto-currencies potentially become more widely used in the future as markets mature.“

He showed a number of factors, that could lead to long-term growth in Bitcoin. These include, above all, the regulations in the crypto market, which the Financial Action Task Force (FATF) has been working continuously since then. Their goal is to achieve a common agreement between the individual states.

Four of the five major banks in South Korea announced crypto services

There were other noticable developments in South Korea. As a result of a huge rise in demand, triggered on the one hand by the general interest of customers in the crypto sector and on the other hand by the desire for diversification, four of the country’s five largest banks, which have a total capital of 1.2 trillion dollars, now intend to manage crypto currencies for their customers and offer services in this sector in the near future.

One of these banks, Shinhan, announced such custody services back in 2017. However, the project was paused due to legal problems.

As a direct response to the new legislative resolution on the handling of this area, the „Special Financial Transactions Information Act“, which will be applied next year, the banks Shinhan and Woori published these planned projects. Nonghyup and Kookmin have also set up blockchain teams to lead the development.

That the interest in blockchain technology is generally on the rise in South Korea is also shown by two more facts: More than one million people accepted a blockchain-based system for digital driving licenses within a few months. Also the KEB Hana Bank is working with the Korea Expressway Corporation to implement a blockchain-based toll highway-system.

JP Morgan plans fusion with Ethereum’s ConsenSys

Where there was still great disagreement in South Korea over the legislation of crypto-currencies, some countries had already advanced research into the technology.

This was also used by the investment-giant JP-Morgan. The bank reportedly allowed the Bitcoin exchange of Coinbase and Gemini as customers in May.

JP Morgan is now planning a 20 million dollar investment in ConsenSys, a start-up project of Ethereum, founded in 2017. This would make Ethereum’s development-department responsible for the maintenance and support of JP Morgan’s Quorum blockchain development-unit. This network now includes 320 banks and also JPM Coin, a stablecoin created by the bank itself.

The merger of JP-Morgan and ConsenSys would also indicate a growing institutional demand for cryptotechnology. For example, the banking giant Goldman Sachs might also develop a stablecoin in order to be able to take advantage of such a service in the general market soon enough.

Boston FED wants to explore the development of cryptocurrencies

Also showing great interest in this area is the Boston Federal Reserve Bank, which has entered into a partnership with the Massachusetts Institute of Technology, to understand and research digital currencies.

A multi-year project is planned to investigate the possible application of a digital central bank currency. According to FED Governor Lael Brainard, the purpose is to answer open questions

„about legal and regulatory safeguards, financial stability, and the role of currency in society“

of crypto currencies like Bitcoin, Facebook’s Libra and China’s CBDC.

What does it mean for the market?

As the above examples show, we can continuously see, that banking institutionals, which previously rejected the crypto industry, are now increasingly interested not only in investing but also in developing crypto services themselves. All this strengthens the growing acceptance of this technology by the general public, which could become a main part of the global financial market.

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