3 Banks That Have Big Plans for Blockchain and Cryptocurrency

Varied cryptocurrencies equivalent to bitcoin and ethereum soared on the finish of 2020 and into the brand new 12 months, albeit with numerous volatility, in typical crypto style. The large burst of exercise has highlighted a number of banks which might be catering to crypto clients by leveraging blockchain expertise to develop specialised funds techniques and supply area of interest banking merchandise. And plenty of of those banks are being rewarded by shareholders for his or her innovation. Listed below are three banks which have huge plans for blockchain expertise and cryptocurrencies.

1. Silvergate Capital

The highest-performing financial institution inventory of 2020, Silvergate Capital (NYSE:SI) went public towards the top of 2019, opening round $13 per share. At this time, it trades for roughly $90. The financial institution, which has $5.6 billion in belongings and is predicated in La Jolla, California, is most well-known for the Silvergate Exchange Network (SEN), a digital funds community that may immediately clear transactions in U.S. {dollars} across the clock, three hundred and sixty five days a 12 months, between two customers within the community. That is ultimate for institutional crypto merchants and crypto exchanges as a result of cryptocurrencies are all the time buying and selling.

Picture supply: Getty Photographs.

As one of many first banks to construct this sort of community, Silvergate has a first-mover benefit. The bank has onboarded 76 crypto exchanges and 600 institutional buyers onto the community, and the larger it gets the more attractive it becomes for different clients to hitch. Within the fourth quarter of 2020, there have been a file 90,000-plus transactions carried out on SEN for a complete quantity of $59 billion. That is a roughly 530% enhance on transactions in comparison with the fourth quarter of 2019. Silvergate’s chief technique officer, Ben Reynolds, mentioned on the financial institution’s latest earnings name that the corporate additionally has 200 SEN prospects in its pipeline. New clients herald a number of non-interest-bearing deposits for the financial institution, whereas transactions herald price revenue.

Silvergate can also be constructing out different merchandise associated to crypto. The financial institution not too long ago completed its pilot on a brand new lending product known as SEN Leverage, which permits clients to acquire strains of credit score in U.S. {dollars} that’s collateralized by bitcoin. The product is off to an excellent begin after exiting its pilot program on the finish of the third quarter, rising whole SEN mortgage quantity from $35.5 million on the finish of the third quarter to greater than $82 million after the fourth quarter. Silvergate additionally launched a bitcoin custody answer within the quarter, and Reynolds mentioned launching new merchandise is a key piece of the financial institution’s development technique.

2. Signature Financial institution

The almost $74 billion asset Signature Financial institution (NASDAQ:SBNY), which is predicated in New York Metropolis, has additionally jumped into the world of cryptocurrency with its Signet digital funds system. Signet leverages blockchain structure to create a real-time funds system, which, like Silvergate’s SEN, additionally permits industrial purchasers on the community to instantaneously ship and clear funds to at least one one other. The platform has helped the financial institution herald $10 billion in deposits, which is far more than Silvergate Capital, though Silvergate is a a lot smaller financial institution. Signature additionally has the highest 5 crypto exchanges on Signet.

Signature CEO Joseph DePaolo mentioned the community is “rising by leaps and bounds.” He additionally mentioned the financial institution is constant to construct the ecosystem utilizing the platform, and that he sees the potential for different ecosystems past crypto to make use of Signet.

3. JPMorgan Chase

You may by no means understand it by the way in which Jamie Dimon generally talks about bitcoin, however JPMorgan Chase (NYSE:JPM) is doing all kinds of revolutionary and attention-grabbing work with blockchain expertise. In October, the financial institution launched its own digital coin, the JPM coin, in an effort to conduct world funds exercise, in what appears just like the funds choices of Signature Financial institution and Silvergate Capital. JPMorgan additionally has its personal digital foreign money division known as Onyx with greater than 100 staff.

Moreover, the financial institution has its personal Blockchain Middle of Excellence, which actively researches blockchain and its potential makes use of in an effort to develop its personal expertise and check out options throughout its numerous enterprise divisions. When it launched the JPM coin, Takis Georgakopoulos, the financial institution’s world head of wholesale funds, mentioned he might see a ton of potential makes use of within the funds house for blockchain. As an illustration, he mentioned it might assist banks verify that individuals inserted their account info accurately, serving to to keep away from rejections on funds. He additionally mentioned digital currencies might take away numerous bills at banks equivalent to the price of processing paper checks.