Two banking titans (HSBC and Wells Fargo) have agreed and announced that they will settle matched forex transactions using Baton Systems’ shared settlement ledger (a product built on blockchain technology). The deployment of blockchain by these traditional financial institutions proves that the wider crypto adoption is gradually gaining more ground.
The Benefits Of This System
The firm that owns the ledger system (Baton Systems) claims that trades are completed within three minutes and none of the banks trading with a demo account. According to baton, the fast completion of transactions eliminates settlement and exposure risks. Before now, most banks usually used the CLS system to settle their forex transactions. But the involvement of a third-party bank makes it a less attractive option than baton’s shared settlement ledger system.
In November, SIX Swiss exchange launched a blockchain-built digital trading and settlement platform. Fast transaction settlement means it would take less time to tie up huge capital and liquidity, which offers insurance against a trade loss that may happen unexpectedly.
Other Banks Join The Foray
Currently, the currencies involved are the USD, CAD, GBP and EUR, with plans to include other currencies soon. This disclosure follows the announcement from Goldman Sachs and other Wall Street banks that their daily processes would soon involve the incorporation of blockchain technology.
Also, JPMorgan has been upgrading its Onyx department recently and has put out vacancy notices for software engineers whose major specialization is in “collateral blockchain tokenization.” The bank’s Onyx department was initially established to supervise the creation of the JPM coin, serving as the bank’s governance token.
German Savings Banks Planning To Enable Crypto Trading For Customers
Multiple reports confirm that German savings banks plan to enable crypto trading for their customers but start with the two leading digital assets (BTC and ETH). However, these banks’ plan is subject to the Sparkasse committees’ vote, which is scheduled to hold Q1 2022. The Sparkasse committee is the umbrella body for all German savings banks.
If the vote is positive, the project’s initial phase is expected to be rolled out before Q4 2022. The success of this project might trigger a massive influx of new traders and investors into the crypto industry because Germany’s savings banks are estimated to have a 55m customer base. The current plan enables the savings banks’ holders to perform crypto transactions from each bank’s mobile app.
The finance ecosystem is becoming highly competitive as private FinTech companies (such as PayPal) compete with the banks to hijack their customer base. Hence, it is no wonder the banks are eager to make a foray into the crypto world.
Banks are convinced that once they get rid of any regulatory obstacles and venture into that line of business, they will have the edge over the private FinTech firms since they have a solid infrastructure and huge customer base. If they don’t make this jump soon, they might likely go out of business in the near future.
