Traditional Banks Double Down on Crypto: How Legacy Finance is Fueling the Next Blockchain Revolution

Wall Street's old guard just placed its biggest bet yet on the future of money.

Major banks are pouring billions into crypto infrastructure—proving even skeptics can't ignore blockchain's gravitational pull. From custody solutions to tokenized assets, traditional finance is building bridges to Web3 at breakneck speed.

Why the sudden enthusiasm? Simple: fear of missing out trumps fear of volatility when profits are on the line. After years of dismissing crypto as a 'fraud' (thanks, Jamie Dimon), these institutions now race to claim their slice of the $2T digital asset pie—with all the grace of boomers discovering TikTok.

The irony? The same banks that once blocked crypto purchases now compete to custody your Bitcoin. Welcome to financial innovation, where principles follow profits like clockwork.

$3, in collaboration with CB Insights and the UK Blockchain Technologies Centre, titled “Banking on Digital Assets,” analyzed over 10,000 investment agreements and surveyed more than 1,800 global finance executives to reach this conclusion. Despite regulatory uncertainties and market fluctuations, institutions are focusing on developing custody, tokenization, and payment systems. This trend indicates a shift from speculation in cryptocurrencies to infrastructure transformation.

ContentsThe Emphasis on Cross-Border PaymentsRegulatory Challenges Fail to Deter Investment

The Emphasis on Cross-Border Payments

According to the “Banking on Digital Assets” report, from 2020 to 2024, traditional finance institutions have been involved in 345 Blockchain agreements. A quarter of these investments were directed towards infrastructure companies providing Blockchain settlement and asset issuance rails, with cross-border payments receiving the largest share. This was followed by crypto custody solutions, tokenization, and foreign exchange transactions on Blockchain. Additionally, 65% of bank executives are actively exploring custody services, and over half prioritize stablecoins and tokenized real-world assets.

The report highlights HSBC’s tokenized Gold platform, Goldman Sachs’ GS DAP instrument, and SBI’s quantum-resistant currency initiative as key examples. However, less than 20% of banks offer cryptocurrency trading or individual wallets.

Organizations plan to utilize Blockchain to streamline balance sheet management, accelerate liquidity, and reduce reliance on legacy messaging rails. Survey findings suggest that 90% of finance leaders believe cryptocurrencies will have a “significant” or “very large” impact on finance by 2028. Half of the institutions anticipate launching a tokenized bond pilot or developing a settlement LAYER compatible with central bank digital currencies (CBDCs) and private stablecoins within the next three years.

Regulatory Challenges Fail to Deter Investment

The report notes an intriguing peak in Blockchain investments originating from traditional finance sources in the first quarter of 2024, following the collapse of the FTX exchange. Despite regulatory caution in the US and Europe, emerging markets like the UAE, India, and Singapore have accelerated their adoption, which has, in turn, bolstered global capital’s market orientation.

Ripple believes the findings of this report prove that the tokenization of real-world assets has entered the implementation phase.

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