Benefits may emerge as skepticism wanes
Although recent banking collapses and regulatory scrutiny have led to skepticism about cryptocurrency, banks with an eye on innovation continue to explore uses for blockchain, digital assets and web3 solutions internally and in customer-facing products and processes.
Banking leaders are exploring the ability of these technologies to deliver valuable services to customers and also use them in their own processes.
“We’re seeing the larger banks adopt blockchain for cross-border settlement,” said Grant Thornton Principal & Forensic Technology National Practice Leader Johnny Lee. “Tokenization of real-world assets and back-office settlement functionality likewise represent extremely promising use cases for blockchain over time.”
The immediate prospects of cryptocurrency in particular for the banking industry are tenuous, as the regulatory environment continues to be uncertain. Recent SEC lawsuits against market participants show that the Commission is eager to classify many cryptocurrencies (with the notable exception of Bitcoin) as securities, which would require market participants that deal in crypto assets other than Bitcoin to register with the SEC.
Banking regulators also threw cold water on cryptocurrency in the industry with a statement in January highlighting the risks that crypto assets pose to banking organizations. Legislation that may regulate cryptocurrency in the United States, meanwhile, is in its infancy in Congress. But despite these regulatory hurdles and the recent failures of a number of cryptocurrency exchanges, crypto lenders and other market participants, banking leaders continue to see promise in decentralized finance platforms that can use blockchain technologies to support fiat lending and investing and facilitate asset exchanges. We have seen an accelerated adoption of these technologies in particular by banks in Europe, from institutional to retail offerings.
Leaders of financial institutions of all sizes are working to determine the role that these technologies will play for them now and in the future. Grant Thornton professionals say banking leaders that follow the right steps have an opportunity to make the most out of blockchain, digital assets and web3 opportunities in banking, capitalizing on the opportunities while managing the risks.
