These Banks Have Big Plans for Crypto and Blockchain

Not too long ago, the tale of banks and crypto seemed to be one of legacy versus blockchain systems. Due to its various perks, many were quick to point out that blockchain technology could significantly upgrade the way banks conduct their operations, be it in regards to security, efficiency or reliability. Perhaps spurred by the recent influx of interest into crypto from all sides, however, banks have decided not to wait for a complete overhaul and instead combine their traditional offering with various crypto products.

Silvergate Capital: banking for the future

The newly-opened Silvergate Capital‘s basic premise is in line with that of blockchain: a network that is operational 24 hours a day, 365 days a year. Its rapid Silvergate Exchange Network (SEN), which boasts no delay clearing U.S. dollar transactions, has undoubtedly contributed to the bank’s shares jumping from $13 at the time of launch in 2019 to around $90 today ‑ making Silvergate’s stock the top performer in the financial sector for 2020.

Silvergate has thus far added 76 crypto exchanges and 600 institutional investors to its network, with another 200 clients waiting in line. We know from the network effect, the more clients Silvergate has, the more attractive it will be to other customers.

Sure, that’s a lot of clients, but are they active? Absolutely. Silvergate processed over 90,000 transactions in the last quarter, amounting to $59 billion. Obviously a major part of the bank’s growth blueprint revolves around crypto, with plans to issue loans with BTC as collateral and a working crypto custody solution being just some examples.

Signature Bank: digital payments via blockchain

The New-York based Signature Bank, which holds $74 billion in assets, closely resembles what a blockchain-powered bank might look like. Their proprietary Signet digital payments system blockchain architecture to facilitate an instant-payments network that has so far brought in $10 billion in deposits and attracted the attention of all five of the biggest crypto exchanges. Signet payments settle in real-time and don’t incur transaction fees.

At this time, Signature Bank only offers Signet services to its commercial clients. But there’s a bank that’s doing even more with blockchain technology…

JPMorgan Chase: a digital currency division and its own cryptocurrency

While perhaps least committed to making big shifts, the example of JPMorgan Chase is the most well-known, and not just because of CEO Jamie Dimon’s early downplaying of BTC. Since the comments were made, the bank launched its JPM coin:

JPM Coin is a permissioned, shared ledger system that serves as a payment rail and deposit account ledger, enabling participating J.P. Morgan clients to transfer US Dollars held on deposit with J.P. Morgan. JPM Coin facilitates real time value movement, solving common hurdles of traditional cross-border payments… JPM Coin seeks to address the complex challenges of cross border payments and simplify its clients’ money moving needs through next generation corporate treasury services.

Furthermore, JPM opened a digital currency division and a research center for blockchain. For a bank to “put its money where its mouth is” and create an entire division focused on integrating blockchain into traditional banking speaks volumes about JPM’s beliefs in the future of cryptocurrencies.

Crypto banks for all?

The three banks profiled above are mostly focusing their efforts on their commercial clients, on business-to-business transactions. What about blockchain banks for the rest of us?

The recent string of native crypto banks opening their doors has captured a lot of attention. Kraken made the most of the Wyoming SPDI charter to become the first full-fledged crypto bank in the U.S., bolstering its exchange branch with an institution that focuses on safety, security and transparency.

Anchorage also made headlines by being the first digital bank to get a federal charter, and it has since committed to helping various financial institutions better manage their digital assets. So far Anchorage has been primarily focused on business-to-business transactions, though in the future may pivot into crypto services for all customers.

And while the concept of crypto lending is no longer a novelty, Nexo stands out among its peers.

With over $4 billion processed in more than 200 jurisdictions and a large client base, Nexo has become the world’s biggest crypto lender. Their jump into decentralized finance brought crypto lending from the fringes and closer to traditional finance. Anyone can open a Nexo account. Furthermore, Nexo recently made headlines by issuing the first-ever mortgage using crypto.

Although each of these institutions has adopted a different approach when it comes to crypto, the trend of paving the way towards ubiquitous crypto finance is very much consistent. More banks involved in blockchain means greater access and lower barriers of entry for institutions and for individuals.