Financial Institutions’ involvement in blockchain and digital assets is continuing to grow. Whether that is through the adoption of the technology itself or through their involvement in digital assets.
There is no denying the benefits that the implementation of blockchain can bring to financial institutions in terms of its efficiencies to processes. Whether that is through real time payments, streamlined approval processes, internal accounting and audit processes or just reducing transactions costs, there are savings to be made through adopting the technology. Blockchain has the ability to remove complex processes and improve processes however, one of the reasons for slower adoption has been the transition from legacy tech stacks. This of course takes time.
As well as the implementation of the technology, as the digital asset market grows, so too does the desire to deal in the market. Financial institutions are issuing their own tokens to improve internal processes or offering the custody of digital assets as a service, noticing the potential of the industry and the revenue it can generate. One of the areas that is inhibiting a wider scale adoption of this is the lack of clarity on regulation. As a highly regulated industry, it is natural that they are taking a cautious approach to this. There are signs of clarity to come with the Basel Committee consulting on obligations for banks holding cryptoassets which will be key to adoption. One cause for concern is the level of volatility in the cryptoasset sector. However, institutional adoption of cryptoassets would see greater liquidity in the market which would settle prices.