Despite Crypto Instability Wall Street Majors Accelerate Blockchain Platform Development
(25 August 2022 – United States) While major Wall Street Banks have been hesitant to invest directly in cryptocurrencies, many such as JPMorgan and Goldman Sachs are tirelessly working to integrate blockchain / distributed ledger technology (DLT) into trading and other operations.
JPMorgan launched its own blockchain platform “Onyx” in 2020 while Goldman Sachs is trading bonds and debt securities for clients on DLT networks such as Ethereum as it continues to scale up its own blockchain-based trading offering. Major Wall Street financial institutions (FIs) including JPMorgan and Goldmans anticipate long overdue upgrades to their antiquated legacy core systems using blockchain will enable them to run faster, at lower cost and ultimately more profitably.
East & Partners exclusive new blockchain adoption research details receptiveness and perceptions among CFOs and corporate treasurers of the Top 100 revenue ranked corporates in nine countries globally, in particular advice required to accelerate their adoption of crypto based payments, barriers to uptake, CBDCs and stablecoins.
Major Wall Street Banks investing in blockchain technology assert that using blockchain in trading platforms should lower the risk associated with trading partners. Proponents also maintain it could make it easier for issuers to track who owns their shares or other assets.
Goldman expects the DLT-based trading platform it is building to service its own operations and clients but also potentially be “white labelled” by other banks as well. Competitors are also planning for wider platforms. JPMorgan’s Onyx platform can be used by other banks, with over US$350 billion of US repurchase agreements (repos) processed by Goldman Sacs and BNP Paribas among others.
Blockchain-driven systems on Wall Street would be different in some respects from the systems behind bitcoin and other cryptocurrencies Paul Vigna reports for the WSJ. They would be “permissioned networks”, meaning a central party such as a bank or consortium of FIs would determine access. Outside of banking, Walmart has used blockchain for tracking its supply chains. In real estate, some title companies have used it for recording homeownership.
“Blockchain technology is going to rewire all financial services,” said New York Stock Exchange Former President Tom Farley.
“I was a sceptic when I first heard of the blockchain, but no more. I’m not doing this just to satisfy my curiosity, everything has a commercial driver. The bank has more clients for digital bonds and expects to complete more sales” commented Goldman Sachs Head of Digital Assets, Mathew McDermott.
“They’re doing real trades. Still, competition is tight. There are the likes of Mathew in every bank” stated Digital Asset CEO Yuval Rooz which writes blockchain software and counts Goldman and the Australian Stock Exchange (ASX) among its clients.