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- Barclays, Citigroup, and Goldman Sachs are among the most active backers of crypto and Blockchain firms
- Surging profits, better regulatory options, and increasing demand from clients forced banks to recognize cryptocurrency
- Massive revenue potential with a small team
According to research by Blockdata, a Blockchain market intelligence outfit, more than half of the top 100 banks by the management of their assets are investors in major crypto and Blockchain technology-based companies and projects.
Global banking behemoths are increasing their presence in the emerging crypto and Blockchain firms through early- and late-stage funding for projects and businesses in the industry. Data released by Blockdata, a blockchain market intelligence outfit, revealed that 55 of the top 100 banks by assets they handle have exposure to Blockchain. Their involvement cuts across direct and indirect investment in crypto and decentralized ledger technology firms by the banks themselves or their subsidiaries.
Block data research singled out Barclays, Citigroup, and Goldman Sachs, among the most active backers of crypto and Blockchain firms. In addition, JPMorgan and BNP Paribas have also been categorized as serial investors in the emerging space.
The investments are a part of a more significant trend of support for Blockchain startups by the Banking Behemoths, and funding figures have almost doubled as compared to 2020.
Crypto custody was the point of focus for most banks
The research also revealed that crypto custody was the point of focus for most banks delving into the crypto space. The research also revealed that a quarter of the top 100 banks by AUM are either developing crypto custody solutions or are backing startups that offer custodial services for digital assets.
Crypto custody platforms are being built by central banks in the U.S., Asia, and Europe as the first tentative steps into cryptocurrencies.
Block data revealed that three significant factors have led banks to dabble in cryptocurrency. These are surging profits of cryptocurrency startups, better regulatory options, and increasing demand from clients for exposure to digital assets.
NYDIG president Yan Zhao stated back in May that crypto trading behemoths like Coinbase are raking in millions in profits. It has made Banks that were earlier reticent towards cryptocurrency re-examine their stands.
Massive revenue potential with a small team
The massive revenue potential can be achieved with a smaller team. For example, Coinbase’s valuation is almost half of Goldman Sachs, the 13th largest bank globally, despite employing only about 4% of the latter’s workforce.
Citigroup is the latest banking giant dabbling into crypto, with its global head of foreign exchange reporting a surge in interest among its clients. Citi has, however, not decided if it will offer cryptocurrencies to its clients, but trading, custody, and financing were all under consideration.
Since August last year, Citi has seen a rapid expression of interest in bitcoin across a broad spectrum of its clients, including large asset managers. Some Clients asked the bank for research, and others wanted to trade a range of coins through the bank and finance deals with cryptocurrency holdings.
Another central Bank which has expressed interest in cryptocurrency was Bank of New York Mellon and State Street. Both have announced plans to become active in different areas of the cryptocurrency market. Goldman Sachs also completed executed its first cryptocurrency trades and formalized the set-up of its bitcoin desk on Friday, two months after the US bank announced that it would re-enter the market.
All the central banks are making their foray into the cryptocurrency arena despite continuing skepticism in some central banking circles. The Bank of England governor Andrew Bailey termed cryptocurrencies as assets with no intrinsic value. Andrew on Thursday said that investors who invest in cryptocurrencies must be prepared to lose all their money.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
