It’s been a rough 12-18 months for Crypto. But, as is always the case during “crypto winters,” serious work has continued behind the scenes on blockchain-related activities, including by national treasuries and major financial services firms.

I thought it would be worthwhile taking a look at what’s new.

Several major financial services firms have been adopting blockchain technology and in so doing, showcasing its potential to transform the industry:

• JP Morgan Chase: This financial giant has been actively exploring blockchain technology. It developed its own digital currency, JPM Coin, to facilitate instantaneous payments between institutional clients. JP Morgan's blockchain-based Interbank Information Network (IIN) was launched to improve the efficiency of cross-border payments by reducing the number of participants needed to verify a payment.

• Goldman Sachs: The firm has shown deepening interest in blockchain by investing in blockchain-related startups and exploring the use of blockchain for various financial services. Perhaps most interesting, Goldman Sachs has been involved in tokenization projects, which aim to digitize traditional assets like real estate or stocks, making them easier to trade and manage.

• BlackRock: Known for its significant influence in the investment management sector, BlackRock is investigating how blockchain can be used for asset management and trading. The firm sees potential in using blockchain technology to enhance transparency and efficiency in financial transactions.

• Fidelity Investments: Fidelity has pioneered incorporating blockchain into its operations by offering cryptocurrency custody services and exploring other blockchain applications. The company has launched Fidelity Digital Assets, a subsidiary providing institutional digital asset solutions.

• HSBC: This global bank uses blockchain technology for trade finance and foreign exchange transactions. HSBC's FX Everywhere platform leverages blockchain to settle foreign exchange trades, improving efficiency and reducing costs.

Over the past six months, the issuance and development of Central Bank Digital Currencies (CBDCs) have also seen significant advancements across various countries:

The momentum behind CBDC development has remained strong, with several central banks progressing in their respective projects. For instance, the European Central Bank (ECB) has been actively developing its CBDC alongside countries like Argentina and Brazil, working on their legal frameworks and pilot phases.

• Specific Country Developments:

  • Argentina: The Central Bank of Argentina is developing a legal framework for its CBDC project, which aims to address economic issues and inflation.

  • Australia: Mastercard concluded a CBDC blockchain pilot with the Reserve Bank of Australia, although a full-scale CBDC is still years away.

  • Brazil: The Central Bank of Brazil has been working on the launch of the digital real (DREX), focusing on privacy and infrastructure issues.

  • China: The e-CNY was used in international crude oil trade, marking a significant step in cross-border trade using CBDCs.

  • India: The Reserve Bank of India is piloting its CBDC in the interbank borrowing market.

  • Philippines: The Philippines is advancing with a wholesale CBDC pilot to enhance large cross-border foreign currency transfers.

• Cross-Border Projects:

  • Project Mariana: This project involved central banks from France, Singapore, and Switzerland to test wholesale CBDC for cross-border trading and settlement using automatic market makers.

CBDC usage is likely to expand. A recent Bank for International Settlements (BIS) survey indicates an increasing likelihood of CBDC issuance among central banks. So, while many central banks are still cautious, a growing number see issuance as possible in the medium term.