News
Banks are slow to embrace the potential of blockchain
What’s going on here?
Banks aim to tokenize
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such as bonds and currencies with blockchain technology for greater efficiency and lower costs. Despite ambitious plans, progress is slower than expected.
What does this mean?
Asset tokenization is intended to make trading faster, cheaper and more efficient, while improving ownership records. HSBC and Northern Trust boldly predict that up to 10% of global assets could be tokenized by 2030, but progress is slow. At the Money20/20 fintech conference, Citibank’s head of digital assets, Ryan Rugg, revealed that their only live application so far is a tokenized deposit. Likewise, that of Australia
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The exchange stopped updating the blockchain after seven years. The main problem is fragmentation: banks are creating their own networks, complicating cross-platform trading. Julien Clausse of BNP Paribas highlighted these challenges as a major slowdown factor.
Why should I care?
For markets: The technology has stalled but the promise remains.
The slow integration of blockchain into traditional banking has an impact on investor sentiment. Banks working in silos create fragmentation, hindering universal solutions. However, tokenization could still transform commerce. Investors should watch developments, especially experimental blockchain-based projects such as bonds.
The bigger picture: A hybrid financial future awaits us.
While the full-scale blockchain transition is slow, tokenization remains viable. Ripple’s acquisition of cryptocurrency custodian Metaco and its partnership with HSBC indicate strategic moves. Although many US banks have suspended their digital asset services, there is optimism. Ryan Rugg envisions tokenized deposits 24/7, free from traditional banking hours. Julien Clausse foresees a hybrid world where tokenized and traditional assets coexist, which will likely persist for years.