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Enterprise blockchain technology has been palling, but financial institutions are investing enormously in digital assets, a new scrutiny shows.
News has been evolving around that Goldman Sachs, JPMorgan, and Citi are esteeming waltzing in the crypto custody market, likely to surprise many who haven’t traced the blockchain tech or digital asset transposes of major U.S. financial foundations over the last half-decade. However, scrutiny based on publicly attainable blockchain drives data clearly shows that many institutions, some more than others, are slowly degrading blockchain tech and dislocating their core to regional crypto assets.
To levy how institutions are attuning to blockchain technology, we polled their action announcements. We looked at plausible media, such as CoinDesk and the Financial Times, and settled gumption as a reported investment, internal or external facing company project, or consortium participation event primarily involving the company.
We can see a clear shift. In 2015 and 2016, financial institutions tended to have a technology-first focused strategy. They were initiation members of consortia like R3 and the evolution of the Corda protocol. More recently, as you can see in our matrix, leaders in the space have relocated away from this earlier positioning to aim their efforts more towards digital assets.
The shifting focus is marked. Up until 2018, blockchain and distributed ledger technology (DLT) dominated the hype pushed by major consortia formations, which also came when blockchain-without-crypto startups raised financing the tens of millions of dollars from major financial institutions. The landscape has since changed significantly.
Goldman Sachs exemplifies the change. Whether through investments, exploring the launch of its digital token, the previously mentioned entry into custody, the bank shifted technology to a balanced and diverse approach across technology and assets, which, per our graph, place them in the usher towards the rest of the market.
For years, JPMorgan had led a robust technology-first approach with its development of Quorum and its long-held bearish public voice on digital assets, which has begun to reverse course. From 2018 to 2020, we can see JPM trending upwards to become more asset-focused on the graph above. In part, it has been driven by JPM divesting itself of Quorum ConsenSys and a change of tone in its position on bitcoin.
In 2020, Fidelity saw a significant acceleration of its asset-focused strategy launching an “incredibly successful” bitcoin custody business and continuing to invest in various crypto-related startups. Its contenders, such as Schwab, are also entering the market and taking positions in crypto mining stocks. Meanwhile, the largest asset manager of them all, BlackRock, recently signaled that it would soon be “getting into the bitcoin game.”