The largest banks on Wall Street have mainly refrained from making direct investments in cryptocurrencies. However, many are working covertly to incorporate blockchain, the technology that powers cryptocurrencies, into trade and other industries.
By bringing together buyers and sellers of securities and lending money to businesses, huge Wall Street companies support the economy to function. But frequently, their complex trades are carried out on outdated, unstable platforms. Goldman and others anticipate using blockchain technology to operate systems that are quicker, less expensive, and eventually more profitable.
According to Goldman and others, the risk connected with trading partners should be reduced by employing blockchain in trading platforms. Additionally, supporters claim that it may make it simpler for issuers to identify who owns their shares or other assets.
On blockchain-based networks like Ethereum, Goldman Sachs currently trades some bonds and other debt securities for customers, and the bank is developing its own blockchain-based trading platform. Onyx is a platform that JPMorgan already uses.
Tom Farley, NYSE’s Former President, said “Blockchain technology is going to rewire all financial services.”
Competitors are intending to use larger platforms as well. Other banks can utilize JPMorgan’s 2020-released Onyx platform. It has been used by Goldman, BNP Paribas, and others to trade repos, or repurchase agreements. Onyx has handled repo transactions worth over $350 billion, according to JPMorgan.
The digital asset group at Goldman is led by Mathew McDermott and employs roughly 70 full-time personnel with expertise in areas including engineering, government affairs, and compliance. When he initially learned about the blockchain, McDermott claimed he was skeptical, but not any more. The same can be said for some prominent Wall Street bankers who at first laughed at the notion that bitcoin or other cryptocurrencies were anything more than a passing trend.