Since its emergence in the last decade, usage of blockchain has proliferated among the world’s top financial institutions.
Most major banks have now completed a bond issuance on a blockchain network, or utilised products developed by others using the technology in some form. But only a few are creating products themselves and even fewer have cryptocurrency-related ideas in the works, with most plans shrouded in secrecy.
These are some of the biggest institutions that are working on blockchain or crypto projects right now — that we know of:
HSBC said it planned to move the settlement of $20bn in assets onto a new blockchain-based custody platform built by the bank in March last year.
The platform, known as Digital Vault, will give investors access to records of securities bought on private markets in real-time based on open-source blockchain technology by R3. The bank is putting more than a third of its eligible assets on the platform, which will digitise the paper records of private placements and use blockchain to speed up the process of making checks or queries on holdings.
HSBC is also working on the development of a letter of credit platform on blockchain with Contour. Though still in production, 18 transactions to the tune of $35m in goods have been completed on Contour to date.
A spokesperson for HSBC told Financial News that the bank expects to move regular transactions over to the network from the first quarter of 2021, after investing around $5.8bn in technology efforts in 2020.
JPMorgan is developing a digital token and blockchain platform which allows clients to transfer payments instantaneously.
The bank’s in-house blockchain unit Onyx has been under construction for the last five years, and has more than 100 employees on its staff. JPM Coin, the bank’s token, is being used to make global payments by large companies.
Meanwhile its blockchain network Liink is now being used by more than 25 of the world’s largest 50 banks in 78 countries, including Deutsche Bank, Danske Bank and a number of central banks.
Projects undertaken by the new business so far include Dromaius, which simulated the issuance and transfer of debt securities to show the potential for distributed ledger technology, of which blockchain is just one type.
Meanwhile in a project named Ubin, Onyx has been working with the Monetary Authority of Singapore to develop a prototype enabling payments to be made in different currencies on a single blockchain network.
JPMorgan is also one of Wall Street’s biggest bitcoin bulls, with analysts at the bank supporting a long-term value on the cryptocurrency of $146,000. The bank’s boss, Jamie Dimon, has had a colourful relationship with bitcoin, which he has criticised time and again.
Citi is working with technology firm Consensys to develop a blockchain-based platform for commodity trading.
Based on the Ethereum protocol, Citi is also working with Komgo to digitise assets such as letters of credit, speed up transaction settlement and organise record keeping.
Mitsubishi UFJ Financial Group
The fifth largest bank in the world is said to be planning to issue its own digital currency, via a project it started back in 2015.
The MUFG token will be a stablecoin, the bank’s boss Hironori Kamezawa said last year, pegged 1:1 to the Japanese yen. Fellow Japanese banking group Mizuho is also a partner on the project.
However, the rollout of the project has been delayed several times since its launch. It was last said to be launching its token for use in the second half of 2020, but the coin has yet to emerge.
Bucking the trend, Barclays is one of the few major banks to come out against cryptocurrencies as an investment.
The firm’s private banking arm said bitcoin is “almost uninvestable” due to its extreme volatility, providing little diversification benefits for large investors.
However, the bank said in a 2019 report that it had begun exploring use cases for blockchain.
In 2019, UBS announced that the Swiss bank would lead a consortium of lenders to launch a blockchain-based trade-settlement platform called we.trade.
Other users of UBS’ platform include Société Générale, Caixa Bank, HSBC, Santander, UniCredit, Nordea, KBC, Rabobank, and Deutsche Bank, which use we.trade to settle international transactions.
We.trade offers services such as bank payment guarantees and invoice financing, using blockchain to help power transactions between member banks on the platform.
Goldman Sachs is said to be planning an entry into digital asset custody, though little has been revealed on the project to date.
The Wall Street lender issued a request for information to explore custody plans in January, Coindesk reported, in a similar strategy to its rival JPMorgan which is said to have issued an RFI last year. Goldman Sachs was contacted for comment.
In 2019, Commerzbank announced it was developing a solution for machine-to-machine payments on blockchain — forged via a partnership with carmaker Daimler that would see drivers able to pay for power charging without the need to get out their wallet.
Last month the lender also completed a real-time commercial paper transaction on blockchain in a partnership with Rabobank and Euroclear.
Bank of New York Mellon has released little detail on its blockchain projects to date. However, in a late 2019 report, BNY said it had a “series of tokenisation development projects underway to learn about different use cases, any risks to its adoption and what marketplace frictions it can remove for clients”.
Earlier this month, the bank said it plans to launch a new unit focusing on digital assets, including cryptocurrencies. The team is developing a client-facing prototype that is “designed to be the industry’s first multi-asset digital custody and administration platform” for these assets.
Roman Regelman, chief executive of asset servicing and head of digital at BNY Mellon, said in a 11 February statement: “Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field.
“Pending further evaluations and approvals, we expect to begin offering these innovative and industry-shaping capabilities later this year.”
Signature Bank has developed a blockchain platform called Signet, designed to enable payments in US dollars in real-time, 24/7. The platform is closed, meaning it can only be used to transfer payments between commercial clients of Signature.
SBI, better known as the wholly separated financial services spin-off from Japanese mega investor SoftBank, operates a cryptocurrency mining business.
SBI Crypto provides mining services such as a mining pool, advisory and placement and financial services to clients as well as operating its own fleet of crypto mining machines. These machines help create currencies such as bitcoin as well as other digital assets.
To contact the author of this story with feedback or news, email Emily Nicolle