During 2017 investment banks were observers in relation to investing in the cryptocurrency asset class. Some banks even declared cryptocurrency as a bubble and something which will disappear into the abyss over the coming years. However, what they say publicly and what they have dedicated teams locked up in their offices doing are quite different.
It is believed investment bank money will start entering into the crypto asset class towards the end of 2018, and into 2019 and beyond.
The basic consensus is that investment banks won’t enter the market until the asset class matures so risks and returns can be controlled. However, it is well known that all investment banks are busily working in the background formulating and building their cryptocurrency investing strategy.
We’ve outlined below a few examples around how over recent months global investment banks are entering the crypto asset space.
Goldman Sachs
- Opening a Bitcoin trading operation
- Filed patent for crypto-based securities settlement system
Barclays Bank
Performed initial assessment of demand and feasibility of opening crypto trading desk
Bank of America
- Has filed more blockchain related patents than any other entity
Citigroup
- Partnered with Nasdaq to create a cross-border payments system on the blockchain
Credit Suisse
- Completed the first live securities lending transaction on blockchain ($30M transaction)
J.P. Morgan
- Launched Quorum, an enterprise-ready blockchain and smart contract platform
- Filed a patent for a system to record interbank payments on blockchain
MorganStanley
“Bitcoin has emerged as a growing focal point within the payments industry, both for its disruptive potential as well as the potential costs savings that blockchain may help unlock” – Morgan Stanley Research Paper
UBS
- Launched the Utility Settlement Coin (USC) alongside BNY Mellon and Deutsche Bank
- “I believe there is a future for blockchain technology” – Sergio Ermotti, CEO of UBS
HSBC
- In the process of launching multiple pilot programs in an effort to begin transitioning to live blockchain transactions
Deutsche Bank
- Part of the Utility Settlement Coin (USC) project
- Partnered with IBM on a blockchain- based KYC proof-of-concept
We expect to see this trend to continue through-out 2018 and as the asset class becomes more regulated, will support investment banks deploying more resources across the asset class and continually becoming public around their cryptocurrency investment strategy.
