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I always know when interest in digital assets is rising because everyone from my family, friends and colleagues to the postman is asking me questions about how I can get involved.
You are probably wondering; but why now? Bitcoin has been around since 2009. What’s so different this time? Well, the difference is that regulators are gradually drawing attention and weighing themselves up, giving fintechs, corporations, banks and others the barriers within which to operate.
Bitcoin, cryptocurrency, and tokenization are words that grab the attention and ear of a wide variety of people. The past six months have looked very similar to 2017, with seemingly daily headlines about digital assets, their gigantic increases in market capitalization, and the surge in new use cases like non-fungible tokens (NFTs). We’re not just here to talk about the hype, however. We are here to discuss how your business can leverage digital assets, and what advances have been made over the past four years that lead us to believe that the time is right.
Bring new transparency, simplicity and efficiency to every financial transaction
We’re seeing a steady increase in infrastructure revolving around digital assets – technology matures; The regulatory tailwind is increasing and demand from institutional clients is growing. The current shift will have profound implications, especially for financial institutions. Here’s what underpins it and why.
What is the current impact of digital currencies?
The evolution of digital currencies; Whether it’s cryptocurrencies, stable coins (cryptocurrencies that tie their market value to an external reference like the dollar to gain price stability through collateralization) or central bank digital currencies (CBDC) could change the way we do exchange the value. With advantages such as reduced processing time and reduced risk as well as increased liquidity for all asset classes.
The acceptance of digital assets is increasing exponentially. Tokenization alone is expected to be worth $ 24 trillion by 2027, which is 10 percent of global GDP. Cryptocurrencies are also increasingly being adopted by institutions like Tesla and Square. These companies have invested $ 1.5 billion and $ 50 million in Bitcoin, respectively.
In the financial services industry, JP Morgan, Citigroup, Wells Fargo and PNC are some of the leading financial services institutions using blockchain to enable their infrastructure to support a wide variety of digital assets. With only 21 percent of banks on the rise with blockchain technology and the adoption of digital assets, this is the best time for your company to redesign your infrastructure to take advantage of the market.
Why now? Why do digital assets get so much attention?
In the past, regulators lacked the clarity that had previously kept financial institutions from getting involved in digital assets. However, over the past year the regulations have become clearer and the Office of the Currency Auditor (OCC) has issued three directives that benefit the adoption of digital assets. These three policies include Crypto Custody Services, Stablecoin Reserve Service, and Invision Technologies, which allow banks to act as validator nodes to connect to blockchains and conduct stable coin transactions on behalf of their customers. Alongside the OCC, Fed Chairman Powell has mentioned the introduction of a “digital dollar” as a high priority project and is trying to get the public to support the initiative sometime this year.
We see a lot of traction here at IBM and look forward to enabling our customers to succeed as they embark on their journey to digital assets. Our digital asset risk advisory services and regulatory advice help individuals understand the space and drive adoption. Tokenization accelerators and technology advisory services are additional features we can use to support customers on their digital asset journey. Ultimately, our payments expertise will be paramount in building B2B and B2C payment solutions.
Use digital assets
By working together, we will help financial institutions create new forms of financing, democratize the ability to participate in debt and equity markets, reduce delays in securities settlement and generate greater liquidity for all asset classes.
Looking ahead, we see a world where digital and fiat currencies coexist, with a wide range of stable coins and cryptocurrencies, different tracks and solutions that meet different customer and payment needs.
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