The Role of Blockchain in Finance

Stop treating crypto as a separate strategy. The leading enterprise CFOs and treasury leaders are integrating blockchain as core financial infrastructure Traditional remittance costs average 6.5% per transaction, while Stablecoin transfers cost under 1% - representing 85% cost reduction for multinational operations. Settlement time comparisons prove even more compelling: → Traditional cross-border payments: 3-5 business days → Stablecoin settlements: 10-30 seconds Major institutions have already implemented this infrastructure: → JPMorgan processes billions monthly through JPM Coin, with transactions on their Onyx platform reducing settlement times by over 90% → PayPal launched PYUSD, now integrated into 430 million active accounts globally → Visa collaborates with Circle to use USDC for blockchain settlement, processing $3 billion in stablecoin payments in 2024 For treasury management, the advantages compound: → 24/7 liquidity across borders without banking hours or holidays → Elimination of pre-funding requirements in destination currencies → Direct settlement between parties without correspondent bank fees → Reduction in currency conversion costs Blockchain adoption for financial infrastructure continues accelerating. Stablecoin market cap reached $200B in 2024, with projections of $1.1T by 2035 according to Megatech Insights (17.8% CAGR) Implement this infrastructure through regulated partners like Circle (USDC), Paxos (supporting PYUSD), or JPMorgan's Onyx platform. Start with specific use cases in treasury operations or cross-border payments where ROI proves immediate and measurable The companies gaining competitive advantages now will maintain multi-year leads over those still deliberating

This industry often touts the “efficiencies” that blockchain can bring to capital markets & TradFi writ large—but what does that actually mean? This isn't just middle- or back-office operational stuff. Addressing these inefficiencies unlocks front-office performance. When firms can manage risk in real time, they’re not just safer—they’re more agile. Accurate, automated infrastructure expands the scope for risk-taking, improves capital efficiency & broadens the opportunity set from a P&L perspective. Let's consider some concrete examples of where blockchain-enabled infra can modernize legacy processes across financial services... …in private credit. Loan servicing, interest calculations, waterfall distributions & payment routing are manually executed across agents, trustees, and investors. These workflows are siloed, spreadsheet-driven, and often rely on PDFs & email chains. Cap tables, covenants, & borrower compliance checks are also often updated manually--introducing operational risk & scaling poorly as loan portfolios grow. Meanwhile, investors lack real-time visibility into borrower performance & cash flows; reporting delays create uncertainty & limit the ability to price risk dynamically. …in collateral management for derivs. Collateral is processed via batches, often once per day and only on business days. Especially during periods of high vol, this lag creates blind spots: collateral notionals may not appropriately reflect true risk expsoure. In addition, counterparies often over-collateralize to avoid margin calls, tying up working capital. Intraday margining is hard to execute due to siloed infrastructure & the non-atomic nature of collateral settlement. Each party uses its own system for margin calculation, risk assessment, and reconciliation—that is, each desk, each product, each bank, each asset manager; therefore, disputes over margin calls can cause collateral settlement delays & increased credit risk. …in securities lending. Sec lending involves the temporary transfer of securities from a lender (like a pension fund or asset manager) to a borrower (often a hedge fund or market maker). The borrower posts collateral (cash or other securities), pays a fee & returns the securities later. Once securities are lent, the original owner loses visibility into who ultimately holds or re-lends them, while rehypothecation creates multi-layered ownership chains, difficult to track. Trades are tracked via custodians & tri-party agents using batch processes & spreadsheets, while recalls (when the lender wants their securities back) can fail if the borrower already lent them out again. Settlement of loans and returns still relies on traditional clearing systems (e.g., DTC, Euroclear) with T+1/T+2 delays & reconciliation mismatches between lender, borrower, and custodian books are common, requiring remediation. Retail participation is effectively nonexistent & even some institutions face high entry barriers.

I believe blockchain is a transformational force for markets. Displacing trust with truth and transacting bilaterally without counterparty risk is massive. One of the biggest opportunities for market transformation is with public equity. Today, as many as eight different parties sit in between the buyer and seller of equities on a US national exchange. Each one of those parties’ extracts rent. Decentralized custody exchange on blockchain can distill these markets down to just buyer and seller. So what does this mean in dollars? First, there is no need for a registry service – blockchain is the registry. No DTC, Euroclear, etc. DTCC’s annual revenue is $5B, so assume that’s $100B of enterprise value released. Next, there is no need for a centralized exchange. Trading happens on a public decentralized custody marketplace. The marketplace ensures KYC, but other traditional exchange activities – such as selling data – go away. If we just look at NASDAQ and NYSE, that’s about $70B+ of value released. There is no need for an introducing broker. Traders attach their wallet to the exchange and trade. Self-custody and democratized leverage (more on that below). No Schwab, Robinhood, Fidelity, etc. That releases $100’s of billions of value. Finally, lending is democratized. Today, lending is done against counterparties (e.g., you are a Goldman prime brokerage client). With blockchain native securities, lenders can get immediate and true security perfection on their collateral. Lenders no longer care who the borrower is – they have 24x7x365 collateral liquidity. Anyone with dollars can become a prime broker in what becomes a limit-order-book loan market. This not only releases $100’s of billion in value it creates a democratized capital market that benefits both lenders and borrowers. Beyond the value released through disintermediation, putting equity native to chain opens up massive ecosystem benefits, such as cross collateralization to other chain-native assets. Note, this is not “tokenizing” a security that sits at DTC. Nothing I outlined above can happen doing this, as you fail the first tenet of blockchain: displace trust with truth. Equity needs to be native to chain. The blockchain (and corresponding exchange) that drive this disruption will capture at least part of the value released. This is why we built Provenance Blockchain and Figure Markets and why I have been so dogged in pursuing the Celsius and FTX bankruptcies. Chapter 11 provides a way for a bankrupt company to issue public securities exempt from national registration (no S-1). I had thought giving creditors ownership through chain-native equity in a system with such disruptive potential was a great thing, but unfortunately I wasn't successful. Absent that path, we have another way to solve this. It's too big of a market to walk away from. Stay tuned.

Back in 2019, I was working on my M.S. and wrote a paper on how #blockchain would reshape the future of banking and financial services. Little did I know how much would unfold over the next few years! I decided to go back to my research paper to share some of the key highlights I had concluded (and to see how many of my pipe dream scenarios might actually be closer to reality now): 🔍 Historical Context Blockchain isn't new - it originated in 1991 with researchers Stuart Haber and W. Scott Stornetta. However, it wasn't until 2008 that it burst into public consciousness with #Bitcoin, introducing a #decentralized cryptocurrency that could transfer value without traditional intermediaries. 💡 Key Technological Innovations The true power of blockchain extends far beyond cryptocurrency. Key innovations include: - Smart Contracts: Automated, self-executing agreements that eliminate the need for third-party intermediaries - Decentralized Transactions: Removing central authority control - Enhanced Security: Cryptographic principles that make data tampering extremely difficult 🛡️ Security and Efficiency Advantages Blockchain offers remarkable benefits for banking: - Drastically reduced transaction processing times - Significant cost savings by eliminating multiple verification steps - Cryptographic security that makes data breaches exponentially more challenging - Transparent, immutable transaction records 🌐 Beyond Banking: Broader Applications While my research focused on banking, blockchain's potential reaches multiple industries: - Renewable energy exchanges - Food supply chain tracking - Foreign aid distribution - Real estate transactions - Voting systems with reduced fraud potential ⚠️ Challenges to Consider It's not all smooth sailing. Blockchain faces significant hurdles: - High computational and energy costs - Regulatory challenges (especially with GDPR in Europe) - Complexity that makes widespread user adoption challenging - Ongoing security vulnerability concerns 🔮 Future Outlook For banks to remain competitive, blockchain isn't just an option - it's becoming a necessity. Financial institutions, from community banks to global enterprises, must: - Invest in blockchain ❗understanding ❗ - Develop strategic implementation plans - Collaborate with FinTech innovators - Continuously adapt to technological advancements The institutions that embrace this technological shift will lead the next wave of financial innovation. #Blockchain #FinTech #BankingInnovation #DigitalTransformation #FutureOfFinance

What's next in blockchain and fintech? Analyzing strategic hiring across leading fintech and blockchain companies unveils where the industry is headed. Using CB Insights data on job postings at Stripe, Circle, Ripple, Sardine, Chainalysis, Gemini, and Fireblocks, a clear pattern emerges. Security is non-negotiable Every company we analyzed has prioritized security infrastructure, with Gemini and Chainalysis leading the charge. Coinbase's recent $4M ransom payment following a credential compromise underscores this necessity. With institutional capital flowing into digital assets, security is an existential business priority. The institutional bridge is being built The data shows companies pivoting toward enterprise clients, with Ripple and Fireblocks explicitly focused on "bridging TradFi and DeFi." This isn't coincidental -- it's strategic recognition that institutional adoption represents the next growth frontier. Proactive regulatory engagement Circle and Fireblocks stand out with highest-level investment in compliance capabilities. Rather than reactively building to meet enforcement actions, forward-thinking players are constructing robust internal regulatory frameworks that anticipate oversight. From point solutions to platforms Core product expansion reflects industry maturation, with Stripe evolving beyond payments into comprehensive financial infrastructure and Ripple extending from cross-border payments into multi-chain stablecoins. Strategic acquisitions will further accelerate this evolution. Targeted AI deployment The selective but strategic integration of AI -- particularly at Sardine and Chainalysis -- demonstrates a focus on concrete applications rather than speculative use cases. These companies are applying machine learning precisely where it delivers measurable value in risk management and threat detection. The industry is rapidly professionalizing, building infrastructure that satisfies institutional requirements while maintaining blockchain's potential. For execs, analysts, and operators watching the space, the message is clear: the companies that build bridges to traditional finance while maintaining security will define the next chapter.

New technologies, AI and the Blockchain, are reshaping the way banks & financial institutions are operating, for the better…👇 Historically, traditional currencies have always been under the control of powerful authorities like governments and banks. However, 2009 marked a revolutionary change with the introduction of #Bitcoin, the first #cryptocurrency, designed to facilitate direct peer-to-peer transactions, bypassing traditional financial institutions and potentially creating a smoother, more equitable financial system. Banks face a strategic crossroads with crypto's rise: 👉Stay on the sidelines 👉Cautiously enter the market 👉Fully integrate crypto & blockchain services The path for Banks to stay ahead in the #blockchain revolution is complex yet straight forward: 🔸Technology Integration — Banks need to integrate blockchain into their operating models, leveraging a flexible IT infrastructure capable of adapting to the volatile crypto market. 🔸New Services: Institutions are branching out into crypto-related services, such as #custody, #trading, #payments to meet customer interest without full-scale market entry. 🔸Risk Management: With the #risks of hacks and operational risks from supporting various cryptos, banks must enhance security measures and choose supported currencies wisely. 🔸Internal Governance: Robust internal governance protocols and ongoing risk assessments will be essential. 🔸Legal and Regulatory Compliance: Banks must ensure that their crypto services comply with existing AML and KYC regulations. 🔸Customer-Centric Models: As crypto becomes more mainstream, banks must focus on customer-centric models that provide easy access to crypto services. So what’s the plan for banks to stay revelevant? 👇 🔸Adapting Business Models: New business models incorporating blockchain technology, can bring efficiency and new service offerings. 🔸Strategic Partnerships: Collaborations with FinTech can help traditional banks navigate the complexities of the crypto space — Zero Hash, Triple-A, MoonPay etc. 🔸Digital Currency Issuance: Some may consider issuing their own digital currencies, as seen with JPMorgan Chase & Co.'s JPM coin & Revolut which requires careful planning and infrastructure support. 🔸Investing in Infrastructure: Banks will need to invest in both #hardware and #software that can handle blockchain technologies. 🔸Educating Stakeholders: It's crucial for banks to educate their customers, stakeholders, and staff about the benefits and risks of cryptocurrencies. Banks' approaches to integrating blockchain into their operating models will determine their relevance in an increasingly digital financial marketplace. Source: https://lnkd.in/gs8n9E8V by Arthur D. Little & GFT Technologies ——— ✍️ Sign up to The Payments Brews ☕️: https://lnkd.in/g5cDhnjC 📥 Follow Connecting the dots in payments... & Marcel van Oost #payments #fintech #globalpayments #technology

Tokenization is stepping into the financial-services spotlight and fast! Yesterday, Robinhood rolled out a layer-2 blockchain on Arbitrum and began offering zero-commission stock tokens to EU investors bringing more than 200 U.S. equities on-chain in one move. https://okt.to/PgTCGM This isn’t an isolated act: BlackRock’s BUIDL fund—already the largest tokenized money-market vehicle expanded to Solana this spring, showing Wall Street’s biggest names are comfortable moving real assets across multiple chains. Citi Token Services quietly graduated from pilot to live product late last year, converting institutional cash deposits into 24/7 programmable tokens for cross-border payments and trade finance. JPMorgan followed suit just last week, piloting “JPM-D” deposit tokens on a public-permissioned network to settle wholesale payments in near-real time. Why it matters? Tokenization is transforming market infrastructure and reducing settlement times, enabling fractional ownership of assets that were once illiquid, while cutting down on operational costs. The current worth of tokenized real-world assets exceeds US$24 billion, tripling in value compared to last year, and the pace is quickening. Financial organizations are no longer questioning whether they should tokenize but rather deciding what to tokenize next, covering everything from bonds and deposits to stocks and trade documents. Key takeaway for providers & platforms: interoperability and regulatory clarity will decide who captures the lion’s share of this emerging on-chain liquidity. Let’s discuss, what asset classes do you think gets tokenized next? 👇 #Tokenization #DigitalAssets #Blockchain #FinTech #FinancialServices Pranati Dave Sakshi Maurya SuryaTeja Baddila

✦ 𝗙𝘂𝘁𝘂𝗿𝗲 𝗼𝗳 𝗖𝗿𝘆𝗽𝘁𝗼 𝗶𝘀𝗻’𝘁 𝗶𝗻 𝗗𝗲𝗙𝗶... 𝗯𝘂𝘁 𝗶𝗻 𝗯𝗮𝗻𝗸𝗶𝗻𝗴? Just a couple of years ago, crypto firms were all about being “𝘥𝘦-𝘣𝘢𝘯𝘬𝘦𝘥”. But if you caught my lectures at UNH, you’ve heard my two theses: 𝟭. Crypto would need to be regulated for 𝘀𝗮𝗳𝗲 mass adoption 𝟮. Crypto wouldn’t replace banking - it would bring a new breed of 𝗻𝗲𝗼𝗯𝗮𝗻𝗸 Both are unfolding now. After FTX, it became clear: crypto couldn’t scale outside the financial system. Those of us living between the rift of corporate finance and DeFi maximalism knew this moment was coming. The average person doesn’t want to manage private keys. They want FDIC-insured accounts, even if it pays 0.01%. 𝗦𝗲𝗰𝘂𝗿𝗶𝘁𝘆 > 𝗔𝘂𝘁𝗼𝗻𝗼𝗺𝘆 𝗳𝗼𝗿 𝗺𝗼𝘀𝘁 𝘂𝘀𝗲𝗿𝘀. Coinbase figured this out early. Now we’re seeing the next shift: ✦ Circle, BitGo, and others are seeking charters to become “banks”. ✦ Stablecoin bills are advancing in Congress. ✦ Traditional banks like BofA and Deutsche Bank are re-engaging. This isn’t about NFTs or the next $BTC halving cycle – it’s about infrastructure. Stablecoins have evolved into serious programmable financial rails. The line between “crypto” and “bank” is disappearing. Yes, regulatory scrutiny will be intense. 𝗕𝘂𝘁 𝘁𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗽𝗼𝗶𝗻𝘁: 𝗹𝗲𝗴𝗶𝘁𝗶𝗺𝗮𝗰𝘆 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝘀 𝗴𝘂𝗮𝗿𝗱𝗿𝗮𝗶𝗹𝘀. This is how we separate the underlying technology from the wild west that is crypto scams and speculation. The future of finance might not be fully decentralized… But it will be programmable, instant, and global. That’s a future worth building. #notdoomed