As we look ahead to 2024, FinTech Magazine has gathered insight and expertise from dozens of leaders representing companies operating right across the financial services spectrum.
In this instalment, the focus is on the future of crypto, Bitcoin and digital currencies.
Eric van Miltenburg, SVP Strategic Initiatives at Ripple
Since the onset of the so-called Crypto Winter, industry commentators have been debating whether this is the beginning of the end for the industry. But the demise of crypto and blockchain couldn’t be further from reality. While we've seen regulators, primarily in the US, file charges against high-profile crypto companies this year, this actually helps players that are focused on driving utility and solving real-world problems to rise above the noise. As 2024 approaches, we are entering a new era - one that will feature trusted utility, adoption by traditional financial institutions and regulatory alignment.
Importantly, we’ve already started to witness the convergence of TradFi and DeFi solutions, and it’s a pattern that will only accelerate over the coming months and years. Five years ago, crypto and digital assets were considered dirty words by global financial institutions, yet in the past twelve months, we’ve seen these same players show more interest than ever in harnessing the power of blockchain technology. Backed by positive regulatory signals, BlackRock has applied for a spot Bitcoin ETF and continues to push for more, also filing for an Ethereum ETF. HSBC has just partnered with Metaco, a provider of crypto custody infrastructure, to offer custodial solutions for tokenized securities.
Scepticism towards the crypto industry is abating as institutions begin to recognise the extent to which crypto services can plug into their tech stack and drive incremental value – spawning new revenue streams, enhancing customer benefits and delivering material financial returns. We’ll see even more major global investment houses and financial services firms making announcements about how they plan to use the technology in 2024, following the likes of Citi and Bank of America in trialling smart contracts on the blockchain, or Mastercard which has developed crypto-powered AML and fraud solutions. The industry is growing up and next year it will help banks embrace the future of financial services.
Denise Johansson, Co-founder and Co-CEO at Enfuce
As regulatory clarity improves and institutional interest grows, digital currencies, including central bank digital currencies (CBDCs), are likely to gain traction.
Additionally, the continued evolution of decentralised finance and the maturation of the crypto market may contribute to a broader acceptance of digital assets.
Fintech companies will explore innovative ways to incorporate digital currencies into their offerings, and traditional financial institutions may increasingly explore partnerships and services related to the crypto space.
Zachary Michaelson, Senior Director & Engagement Lead at Publicis Sapient
As we approach 2024, the institutionalisation of Bitcoin appears to be an inevitable reality, driven by the relentless pursuit of market dominance by the world's largest corporations. This is not a sudden change of heart about Bitcoin, but rather a strategic move to give customers what they want, while simultaneously expanding their own influence and control.
The narrative is being shaped by key players like Mike Novogratz, founder of Galaxy Digital, who predicts that 2024 will be a year of institutional adoption, primarily through the Bitcoin ETF. This is a clear indication that large corporations are positioning themselves to capitalise on the growing interest in Bitcoin and other cryptocurrencies.
Major banks such as JPMorgan Chase, Morgan Stanley, and Goldman Sachs are building dedicated teams for cryptocurrencies and blockchain technology. This trend is not limited to the US alone; financial institutions worldwide are increasingly embracing digital assets. The institutionalisation of Bitcoin is further facilitated by the anticipated approval of Bitcoin ETFs by the SEC, which is expected to significantly boost institutional confidence and funding in the cryptocurrency space.
However, this trend towards institutionalisation is not without its critics. Concerns have been raised about the potential for corporate monopolies to exert outsized influence and control over the Bitcoin market. The fear is that these corporations, with their vast resources and lobbying power, could shape the rules of the game to their advantage, potentially undermining the decentralised ethos that underpins Bitcoin and other cryptocurrencies.
Regulatory bodies, such as the SEC, are also playing a significant role in shaping the future of Bitcoin. The SEC has been increasing its oversight of cryptocurrencies, taking enforcement actions to prevent fraud, reduce market manipulation and force more disclosure of relevant information to investors and cryptocurrency holders. This increased regulatory scrutiny is seen by some as a sign that the institutionalisation of Bitcoin is becoming more accepted and mainstream. Regulatory action is likely to squeeze out non-compliant, non-institutional players in Bitcoin through enforcement, deterrence and especially increased costs of compliance.
Adrien Treccani, SVP Product at Ripple
As the industry looks to leave behind the problems it experienced during 2023, a new paradigm is emerging. The crypto industry isn’t courting financial institutions as it once was. It doesn’t need to. Global banks and industry giants are actively seeking digital assets solutions to satiate client demand for efficient, transparent and on-demand financial services.
In the last year, we’ve announced partnerships with a number of global banks and, in 2024, we expect adoption rates to continue to soar. As we’ve seen recently with Goldman Sachs and JPMorgan, banks are experimenting with tokenised assets, and need to be able to do so with confidence, inside the framework of strict compliance and security protocols, as well as smooth integrations.
As Metaco integrates with the Ripple business, there will be further overlap between DeFi and TradFi. The XRP Ledger remains one of the longest-running examples of a private tokenisation blockchain and, in 2024, will be sought after to power successful transformation programmes. Designed for both public and private use, banks and financial players can benefit from native tokenisation capabilities, on-chain trading and integrations with automated market makers and exchanges.
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