By George Ward
The cryptocurrency industry is a “New Frontier” compared to traditional finance. Hence, it is no surprise that some banks are expressing interest in the digital assets space, especially decentralized finance (DeFi).
This year banks have shown a more substantial interest in digital assets. Most recently, leading American financial institution JPMorgan introduced cross-border transactions using DeFi.
This took place not long after the oldest bank in America, BNY Mellon, announced the introduction of its Digital Asset Custody Platform.
Earlier this month, The Clearing House, a banking association and payments corporation in the US, said that banks should have the same access to activities involving digital assets as nonbanks.
Banks Are Conscious Of Digital Asset Potential
BNY Mellon’s 2022 Survey of Global Institutional Clients reveals growing demand from institutions looking for access to digital assets through reliable custodians. In addition, the survey results prove banks’ continued interest in digital assets.
The poll indicates that 91% of 271 institutional investors are willing to invest in tokenized assets. The poll further revealed that the majority of these investors use multiple administrators.
Also, 35% of them work with well-known, established companies. One reason banks are interested in cryptocurrencies and DeFi is the increased demand from institutional clients seeking access to digital assets.
Bobby Zagotta, CEO of Bitstamp Cryptocurrency exchange, recently said that Bitstamp had received many requests for its crypto service offerings. This service enables investors to gain exposure to the crypto space without incurring too much risk.
Banks are realizing that their customers want to explore the crypto space. Also, these customers understand that if they can’t do so with their banks, they’ll go somewhere else where they can.
Chief executive of Ethereum Layer-2 Network Institutional Capital Global, Colin Butler, said many institutional investors would stick with the big banks provided they incorporate crypto and DeFi technologies into their service.
The test run by JPMorgan and the Monetary Authority of Singapore was a step toward accepting decentralized solutions. These organizations are testing to see the helpfulness of DeFi frameworks.
Butler explained that the cross-border transaction technology between JPMorgan, the MAS, and other banking entities was quick and secure. He added that it is affordable and feasible thanks to Polygon’s proof-of-stake blockchain.