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Walls Street’s Investment Surge in Crypto Proves It’s Time to Buy, Not Panic

3 mins
31 January 2023, 16:20 GMT+0000
Updated by Ali M.
31 January 2023, 16:20 GMT+0000
In Brief
  • Wall Street institutions are investing in digital assets and blockchain technology despite the recent crypto winter.
  • These firms see the potential of blockchain technology to improve record-keeping, asset management, and settlement processes.
  • Regulatory hurdles and economic pressures are challenges that these firms face, but they believe in the transformative potential of blockchain technology.
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The world of finance is constantly evolving, and the latest trend that has caught the attention of Wall Street institutions is the rise of crypto. Despite the many challenges and controversies that have plagued the industry, major players in the financial sector are not deterred and are actively seeking ways to expand their reach into this new digital frontier.

From BNY Mellon to BlackRock, Fidelity Investments, and even Goldman Sachs, these institutions are betting that the future of finance lies in blockchain technology, tokenization, and crypto custody. With regulators becoming increasingly tough on exposure, the cost of doing business in this space is going up, but that has not deterred these institutions from pushing forward with their plans.

The crypto winter may be far from over, but for these institutions, the transformative potential of the crypto world is too great to ignore.

Wall Street Institutions Bet Big on Crypto

The world’s largest asset manager, BlackRock, has plans to continue exploring the use of digital assets in capital markets offerings and is focusing on four key areas: stablecoins, permissioned blockchain, tokenization, and crypto assets. Last year, BlackRock entered into a partnership with Coinbase Global to make it easier for institutional investors to manage and trade Bitcoin.

Goldman Sachs has launched a digital assets platform with hopes that clients will use the technology to issue financial securities in the form of digital assets. The firm helped the European Investment Bank issue a digital bond last year using blockchain technology, which resulted in a faster settlement process. Goldman also has a team of traders who deal in cash-settled crypto derivatives for clients.

JPMorgan Chase & Co. CEO Jamie Dimon has been a long-time critic of cryptocurrencies, but the bank has been actively developing blockchain-based systems to run traditional financial transactions. JPMorgan is running several projects from its blockchain division, Onyx, including a payment network for banks and a platform to tokenize traditional assets.

Fidelity Investments is planning to expand the types of assets it offers custody for beyond Bitcoin and Ether. The firm will explore offerings around asset staking and lending, according to the Head of Institutional at Fidelity Digital Assets, Chris Tyrer. Fidelity is continuing its push into the crypto market and has set a goal of hiring an additional 100 people in the division, with a target of 500 by the end of the first quarter.

It Won’t Be Easy

Still, there are significant hurdles that Wall Street institutions will face in their attempts to invest in the crypto world. Regulators will likely become stricter with increased exposure, and with the current economic downturn, banks are under pressure to cut costs, which may result in scaled-back ambitions.

The recent plunge in crypto prices and valuations may not help to rekindle investor demand, although a recent rebound in token prices may signal the worst of the recent chaos is over.

Wall Street Crypto Market Cap
Source: TradingView

Despite these challenges, Wall Street institutions are betting on the crypto winter to help them make inroads into the business of digital assets and blockchain technology. They believe in the transformative potential of blockchain, which has the ability to improve record-keeping, asset management, and settlement processes.

BNY Mellon CEO, Robin Vince, has stated that recent events in the crypto market only highlight the need for trusted, regulated providers in the digital-asset space.


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