Big Banks Are Cautiously Adopting Blockchain and Digital Currency

November 23, 2020

Blockchain-based technologies are being adopted at a feverish pace in gaming, healthcare and even by governments throughout the world. Big banks have been less enthusiastic to embrace the new technology, but are beginning to do so – at a very slow pace.

Instead of using blockchain for internal cryptocurrency transactions, one of its most popular uses, some banks are trying to monetize it. Last month, for instance, JPMorgan Chase launched its JPM Coin cryptocurrency. The bank said a major tech firm is using the token to make global payments.

In tandem with the announcement, JPMorgan created its new Onyx business unit. Comprised of about 100 employees, the group will focus on blockchain-related projects.

“We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business,” said Takis Georgakopoulos, global head of wholesale payments at JPMorgan.

In Italy, much of the banking sector is using the Spunta Banca BLT blockchain network to reconcile balances among each other. The network is based on technology from R3, a New York-based blockchain platform developer. Spunta is built on R3's open-source Corda Enterprise platform and is governed by ABI, the Italian Banking Association.

The offering is live in more than 100 banks, more than 91 percent of all banks in Italy. In its first six months, the distributed ledger platform processed 204 million transactions, transforming the interbank reconciliation process.

“We’ve talked for some time now about the promise of enterprise blockchain and it’s great to finally see it in practice and working at scale,” David Rutter, founder and CEO of R3, told CNBC. “It’s a start. We’d love to see it adopted in other European countries and then globally. The infrastructure that they have in place creates the foundation to roll out other technologies that can really have an impact on their bottom line.”

Other banks looking at blockchain include The People's Bank of China, which last month announced it was testing its a digital version of its yuan currency. The project involved a lottery sponsored by the government in Shenzhen, through which 10 million yuan worth around $1.5 million were given away to 50,000 lucky winners. They were able to download an app to receive the digital yuan and spend it at more than 3,000 participating merchants.

The Bank of England is also slowly researching the use of digital currency. In March, it published a discussion paper on the development of a Central Bank Digital Currency (CBDC). The currency would be an electronic form of central bank money that could be used by households and businesses to make payments.

To learn more about how blockchain is making inroads with banks throughout the world as well as in other important markets, TMC is hosting The Blockchain Event on June 22-25, 2021, at the Miami Beach Convention Center. The event will feature panel discussions, keynotes and case studies about the role of blockchain in a variety of industries and vertical markets.

Edited by Maurice Nagle

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