One of the first major waves of Bitcoin and cryptocurrency adoption was when Wall Street players began looking into Bitcoin as a speculative asset with the promise of massive gains. It split the community as some embraced it, while others shunned it.
Now however, banking and cryptocurrencies, especially the blockchain aspect of the digital currency, has attracted newcomers. Banks such as Goldman Sachs have gone from ignoring the technology to hiring a crypto trader as head of digital assets.
Even JP Morgan, who is headed by one of the biggest detractors of Bitcoin – Jamie Dimon – has made huge steps in the adoption and development of blockchain, including building its own blockchain and smart contract platform, Quorum.
While banking institutions’ attitudes towards Bitcoin and blockchain has changed significantly, there is still a notable attitude of blockchain over Bitcoin which is still a bit counter-intuitive.
While technically not a bank in the strictest and most-understood notion of the word, the World Bank is another financial institution that is in the process of discovering the advantages that blockchain technology can bring to their specific needs.
The World Bank is viewing blockchain as a potential vehicle for building and restoring trust in financial institutions, which has fallen precipitously around the world in recent years.
The world’s largest multilateral development bank is launching a ‘blockchain lab’ as part of a bid to pilot projects that can improve governance and social outcomes in the developing world.
According to Vincent Launay, an infrastructure finance specialist at the bank, the lab was launched in June 2017 as a way for the institution to try and see what potential there was in blockchain aiding in ending world poverty, but also how it can help their clients leapfrog existing and unsuitable technology. Launay told Cointelegraph:
“The objective is to get a better understanding of how blockchain can help our client countries leapfrog existing technologies. The lab is currently working on proofs of concepts at this stage.
“Some of the use cases that we are looking into are cross border payments, land administration and carbon credit trading.”
“The challenge now is to retool some World Bank staff such that they could assist clients in delivering blockchain solutions. The World Bank is a big institution, so it takes time, but we are working on it.”
Interestingly, Launay mentions the lab could partner with industry experts such as Microsoft, Amazon or Consensys to develop new solutions for the World Bank’s clients. This again indicates how the idea of blockchain technology is spreading deep into the established mainstream of major companies. However, he states that nothing has been formalized yet.
International Monetary Fund
One organisation that is formally looking into blockchain technology, and is quite vocal about it, is the International Monetary Fund (IMF), which although not a bank in the typical sense, also sees benefit in blockchain.
Christine Lagarde, the head of the IMF spoken cautiously, but positively, about the potential that blockchain and cryptocurrency can have on a global stage, but it is mostly a wait and see approach.
“The IMF is already very much looking into it,” Launay reiterated. “It already published two reports on cryptocurrencies and as you probably read, Christine Lagarde is very much aware of what cryptocurrencies are and how they offer great opportunities, but also challenges.”
Race to wait and see
Blockchain technology has been seen as both exciting, and nerve-wracking, with many different organisations, across sectors adopting a wait and see approach. It has been seen with governmental regulations, as certain countries forge a head while others try and pick up on the best approach. And now with banking, this is happening too.
Farzam Ehsani, a former blockchain lead at Rand Merchant Bank and now co-founder and CEO of VALR, says that most major financial institutions now have some sort of blockchain initiative within their company. Ehsani told Cointelegraph:
“Many financial institutions are spending time on blockchain and Permissioned Networks, and there is some space for that, but I think, more and more, financial institutions are starting to realise that crypto assets, as a financial asset class, are emerging in a big way. We are hearing a lot more about them starting to offer crypto assets to their customers.
“All banks are realising they need to get onto this boat, I don’t think many banks necessarily understand where the boat is going, but they realise that this is a development that is taking off and that if they want to be on this journey that everyone is going on, they need to be on the boat.”