Digital Asset Summit Day 2: Financial giants say they’re here to stay
Institutions have hung around the crypto space for years. But now they want you to know they are getting more proactive
Gemini Chief Operating Officer Marshall Beard | Ben Solomon Photo LLC for Blockworks
Executives from financial giants did not only mingle with crypto native folks during day two of Blockworks’ Digital Asset Summit in London.
They took the stage.
“They’ve always kind of been here,” Gemini Chief Operating Officer Marshall Beard said of the institutions. “It’s just in practice, what are they really doing?”
Well, the world’s largest asset manager launched a bitcoin ETF. BlackRock’s iShares Bitcoin Trust (IBIT) is the fastest-growing new ETF of all time, reaching nearly $16 billion in assets after about nine weeks on the market.
Read more: Bitcoin ETF catalyzing broader merge of TradFi, crypto: BlackRock exec
Financial services goliath Fidelity Investments also launched a US bitcoin fund in January, and even custodies the BTC held in that ETF.
“They’re here,” the Gemini COO quipped in a bustling lobby eatery at the Hilton London Metropole. “That’s real.”
Christopher Perkins, president of CoinFund and a member of the CFTC Global Markets Advisory Committee, agreed that various financial institutions have hung around the crypto space for years now.
“But I think it’s their behaviors that are shifting a little bit,” he told Blockworks.
Access to the BTC ETF has helped calm reticence toward crypto in the traditional buy side community, he noted. Otherwise, banks, for instance, have focused on permissioned distributed ledger technology (DLT).
JPMorgan formed blockchain platform Onyx in 2020 and has tested out tokenization initiatives in a permissioned manner as part of the Monetary Authority of Singapore’s Project Guardian, for example.
Avalanche has a “Spruce” subnet for financial institutions to evaluate the advantages of executing and settling trades on-chain. Based on the Ethereum Virtual Machine (EVM), such testnets have a permissioned validator set and a custom gas token to power transactions.
“What the smart ones have done is they’ve designed it in a way that they can flip a switch — whether it’s like a contained Avalanche subnet or Onyx — so that they can pivot to public blockchains when the [regulatory] winds shift,” Perkins said.
Indeed, Mathew McDermott, global head of digital assets at Goldman Sachs, said during a Tuesday DAS panel that there is ultimately a “huge opportunity” for offering services on public blockchains.
“But if I put my Goldman hat on, I just know what we can do from a regulatory perspective,” he said. “It’s something that I think we kind of monitor [and] watch mature.”
Read more: Goldman Sachs head of digital assets: The future is on public blockchains
McDermott noted that asset tokenization — digitally representing physical and other financial assets on the blockchain — remains a huge focus for Goldman Sachs. He noted that many wealth management clients might prefer access to certain asset classes via a token because of the transparency and liquidity.
Blockchain technology’s role in upgrading financial markets “plumbing” is where its value proposition is “probably at its highest,” he added.
“You’re going to start to see intraday liquidity trading on-chain,” McDermott said. “This is hugely transformative and it takes time, but it’s something we’re very focused on.”
Fidelity’s crypto-related work goes beyond its ETF.
Emma Pecenicic, head of digital propositions and partnerships for Fidelity International’s Asia Pacific business, shared a stage with leaders from digital asset banking group Sygnum and Matter Labs, a company that creates and scales blockchain solutions.
Sygnum said Tuesday it was set to tokenize $50 million of Matter Lab’s treasury reserves onto the zkSync blockchain. The tokens are on-chain representations of units from Fidelity International’s $6.9 billion Institutional Liquidity Fund (ILF), the companies noted in a news release.
Pecenicic described bringing treasury reserves on-chain as an “untapped market,” noting that the company would look to continue fostering crypto-traditional finance connections.
In one of the day’s final sessions, Citi’s David Cunningham, the bank’s head of strategy and partnerships, joined Visa and Circle on a panel about the digital revolution in banking and payments.
Read more: The institutions are paying attention. Now comes the hard part.
Citi partnered with Ava Labs on a proof of concept that tokenized a private equity fund on Avalanche’s Spruce subnet last month.
While executives are attending DAS against a crypto bull market backdrop, much of the latest work by these financial juggernauts in the segment was done in a less exuberant environment.
Bitcoin’s price dipped below $16,000 in late 2022. Though it was down about 4% on the day at 2 pm ET Tuesday, bitcoin (BTC’s) $64,500 price level is up about 25% from a month ago.
Every bear market shakes out weak conviction, Beard said.
“There are tourists in every industry,” he added. “People with high conviction will be rewarded.”
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