ING Says Blockchain, Crypto Presents Blockbuster Moment For Banks – Ledger Insights

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During a panel of historic financial institutions during Digital Assets Week, the moderator asked if they saw the largest Binance cryptocurrency exchange as a threat. Hervé François, Digital Assets lead at ING, replied: “It reminds me of when we asked a similar question to the CEO of Blockbuster regarding Netflix. At that point he said they weren’t on our radar. And we know the rest.

He went on to say that the bank is monitoring all newcomers. When cooperating with fintechs, each party brings different things to the table. The bank has a customer base, regulatory experience and knowledge of certain types of financial assets while fintechs innovate faster.

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Olivier Dang de Nomura was even more adamant about the threat of newcomers. He noted that startups are learning from scaling volumes with cryptocurrencies, which positions them well for strengths in place like security tokens. Moreover, it is not the role of regulators to protect financial institutions. So if startups are more efficient, they should be allowed to operate.

“Institutional clients may want to migrate from traditional finance to some of these new players,” Dang said. “Some of these new players now have the firepower to buy the licensees in case they need licenses. I think it’s a threat.

On that note, one of the major exchanges, FTX, has raised $ 1.4 billion in the past four months and is currently valued at $ 25 billion after less than three years of operation. He recently used some of his money to buy an American startup that holds a CFTC digital asset term license.

Dang de Nomura believes the answer should be to partner with fintechs, create joint ventures – like Nomura did with digital asset custody startup Komainu – or start their own businesses. As an example of the latter, Nomura launched BOOSTRY in Japan, focusing on the tokenization of bonds.

Unlike ING and Nomura, Goldman Sachs’ Amar Amlani does not view Binance as a threat. This is because Goldman is focused on moving traditional finance to the new rails, as it sees cryptocurrency exchanges as having a strong focus on retail.

Cryptocurrency versus security tokens

All incumbents have an eye on security tokens. As François from ING said, security tokens are believed to have more potential than cryptocurrencies in terms of market size and opportunities. But today, the business case revolves around cryptocurrency, as this is the area that is currently gaining momentum. When asked when security tokens could take off, his answer was 2022/23.

Swen Werner of State Street Digital takes a longer view. “Strategically, we all think this will have a transformational impact,” Werner said. “There is always a question of timing. Is it five years or ten years? And what are some of the trigger points? He answered his own question by saying that a central bank digital currency (CBDC) was one of them, but expects it to take five years in the United States and Europe. State Street and ING both mentioned the blockchain settlement solution Fnality, of which they are shareholders.

Goldman’s Amlani said it will be an exciting 12 months ahead.

On the cryptocurrency front, each institution is at a different stage of engagement. Last year, Nomura launched its Komainu digital asset custody joint venture and has $ 8 billion in assets under custody. Earlier this week, he invested in Crypto Garage.

ING is soon to launch Pyctor, a decentralized cryptocurrency custody solution and post-trade market infrastructure. Its members include major incumbents, including ABN AMRO, BNP Paribas Securities Services, Citibank, Invesco, Société Générale – Forge, State Street, UBS and others.

“We cannot wait. We’ve actually seen our clients add digital investments to their portfolios, ”said Werner of State Street. “Like it or not, it happens. We must therefore be prepared to meet these needs.

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