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In a short span, cryptocurrency has gone from an alternative investment option to a trillion dollar industry.
Traditional financial institutions are trying to figure out their role in the industry, too. 95% of banks are prepared to make some level of investment in blockchain or distributed ledger technology
The growth of the crypto industry has led to banks’ increasing openness toward adopting blockchain and cryptocurrencies. Here are some of the top blockchain firms working with banks to launch blockchain-enabled and crypto products.
Coinbase claims it’s the world’s most popular crypto exchange to buy and sell coins.
It was founded in San Francisco in 2012.
There are more than 90 different types of cryptocurrencies on the platform – making it easier for traders to find many coins under one roof. Some of the popular coins available on the exchange are Bitcoin, Ethereum, and Litecoin. Coinbase accepts deposits and allows payouts in fiat currencies like the dollar and Euro as well. It also acts as a watchdog for user funds, similar to a bank.
- Coinbase has over 89 million registered users trading $547 billion cryptocurrencies each quarter.
- In 2021, the company grew its Institutional customer base by over 50%, including doubling the number of Custody customers. It launched Coinbase Prime, its integrated solution for institutional crypto needs.
The services it offers to FIs are:
- Prime – Coinbase Prime is a new platform designed specifically to provide a suite of tools and services that institutional investors rely on when trading cryptocurrency – all in one place.
- Exchange – Coinbase claims to be one of the most liquid-regulated crypto spot exchanges in the world, having a dynamic fee structure for high-volume trading. FIs can work with Coinbase to launch crypto trading to their customers.
Some of the FIs Coinbase works with are:
- Ally Bank – Ally is an online-only bank. It uses Coinbase’s platform to allow customers to buy coins with their debit card or credit card by linking their accounts to Coinbase.
- USAA – A USAA account can be linked to a Coinbase cryptocurrency account. While users can’t transact through their USAA accounts, they can view their Coinbase balances and monitor transactions through their USAA account.
- Metabank – Coinbase issues its Coinbase Card in partnership with MetaBank. It’s a Visa debit card that lets the consumer spend down any digital asset in their Coinbase holdings, converting it to USD and earning rewards for each purchase.
Ripple is a payments settlement system and currency exchange network that uses blockchain technology to process international money transfers.
It was founded in San Francisco in 2012.
Ripple can transact for a variety of fiat currencies, cryptocurrencies like Bitcoin, and commodities like gold that settle in almost real-time. Ripple claims to be a cheaper, more transparent, and secure option used by banks. Many financial institutions have teamed with Ripple to use its technology.
Ripple has a native crypto token called XRP that runs on the XRP Ledger, a blockchain network that facilitates payments in XRP.
Ripple also manages RippleNet, which is a decentralized global network of banks and payment providers using Ripple’s distributed financial technology – which claims to provide real-time messaging, clearing, and settlement of cross-border financial transactions.
- Daily Ripple transactions spiked to over 2.5 million in early February 2021, a sudden increase from previous months.
- RippleNet transaction volume totaled $11 billion at the end of 2021.
- Ripple’s valuation soared to $15 billion in 2022, due to a share buyback that was funded by a Series C financing round.
The RippleNet ecosystem includes xCurrent, xRapid, and xVia.
xCurrent – xCurrent is a product used by banks to enable inter-operations between different ledgers and networks. It allows for real-time messaging and settlement between banks.
xCurrent uses the Interledger Protocol, an open, neutral protocol, that connects different ledgers and payment networks operating on the RippleNet platform.
This product claims a cryptographically secure, end-to-end payment flow with transaction immutability, transparency, and information redundancy.
The software is installed within a bank’s infrastructure and is built to interface with the bank’s systems using an API interface or through a translation layer that can consume traditional payment message formats to compress the integration time frame into weeks.
xRapid – xRapid is a product closely connected to the cryptocurrency XRP. It is an On-Demand Liquidity solution for banks that uses XRP as a bridge currency between fiat and other currencies ensuring payments are quickly sent and received in local currency on either side of a transaction. It is a single API that automates the entire process of instantly moving money from one country to another using digital assets.
In that case, the financial institution buys an equivalent amount of XRP and sends it through Ripple’s network. Ripple refers to it as “third-party liquidity provisioning” and states that it is ideal for banks that do not have a corresponding relationship with each other.
xVia – xVia is for corporates, payment providers, and banks who want to send payments across various networks using a standard interface. xVia’s API requires no software installation and lets users send payments globally into the payment status with information, like attached invoices.
More than 100 financial institutions have joined RippleNet. Some of them are:
- Santander – Ripple’s blockchain-powered technology and global network of financial institutions helped the U.K.-based Santander Bank to develop One Pay FX. This mobile app allows customers to see how much money will arrive when they send international payments, while the low-cost transactions happen on the same day.
- Bexs Banco – Brazil-based Bexs Banco, which processes cross-border e-commerce payments for around 210 million customers, joined RippleNet to connect with member banks in North America, Europe, and Asia.
- RAKBANK – U.A.E.-based RAKBANK has been using RippleNet to power instant payments into India.
3. Zero Hash
Zero Hash is a B2B embedded infrastructure platform that allows its clients to integrate digital assets natively into their own customer experience.
It was founded in Chicago in 2015.
Zero Hash powers platforms in the digital asset ecosystem, including those integrated with the Ethereum blockchain. Similar to how BaaS developed for fintechs, Zero Hash provides the infrastructure for FIs to support digital assets whilst owning the client experience.
The company claims launching support for digital assets through Zero Hash requires a few lines of code and no regulatory overhead.
- In 2021, the company reported that 4% of all daily on-chain Ethereum transactions flow through its infrastructure.
- In May 2021, Zero Hash processed 66,542 transactions on-chain, which equated to 3.89% of total ETH transactions in that 24-hour period.
Zero Hash powers neobanks, broker dealers, and payment firms to offer digital asset trading and custody, crypto-backed rewards and round-ups programs as well as high yield products through staking and DeFi, and NFTs.
Some of the FIs that are affiliated with Zero Hash are:
- Tastyworks – A U.S. equity brokerage, Tastyworks partnered with Zero Hash to offer digital asset trading services to traders on its service. The integration of services allows the brokerage clients to trade Bitcoin and Ethereum from the same account they use to trade stocks.
- Moneylion – To provide crypto-related services to its customers, fintech MoneyLion entered a partnership with ZeroHash. ZeroHash powers MoneyLion’s crypto offering within its all-in-one app, starting with access to trading of Bitcoin and Ethereum, as well as round-up of their debit card purchases in Bitcoin.
- Wirex – Wirex, a London-based digital payments platform, collaborated with Zero Hash to support its expansion into the US market. Wirex wanted to reach millions more people and offer them easy access to crypto and fiat currencies. Its distribution began with its debit card across America.
- Deserve – Zero Hash teamed with Deserve, a credit-card-as-service firm headquartered in Palo Alto. Deserve leverages Zero Hash’s crypto rewards API infrastructure to natively enable Deserve’s partners to offer crypto rewards on any credit card purchase. The integration of services allows Deserve partners to offer crypto rewards in assets such as Bitcoin, Ethereum, and others.
Paxos is a regulated blockchain infrastructure platform building transformative financial solutions.
It was founded in New York in 2012.
Paxos uses technology to tokenize, custody, trade, and settle assets for enterprise clients. It enables fintechs and financial institutions to offer crypto capabilities to their users through its Paxos Crypto Brokerage and Stablecoin as a Service products. It also offers settlement solutions for securities and commodities.
- In 2021, Paxos raised more than $500 million in funding from investors like Oak HC/FT, Declaration Partners, Mithril Capital, and PayPal Ventures, with a valuation of $2.4 billion.
- Over 360 million consumers could access digital assets via Paxos Infrastructure in 2021.
Paxos is the umbrella platform hosting the PAX Gold token (PAXG) and Pax Dollar (USDP) digital asset, as well as the itBit Digital Asset Exchange.
- Pax Dollar (USDP) is a collateralizable fiat currency based on Ethereum blockchain technology. It is pegged against the U.S. dollar and is referred to as a stablecoin, which lets companies create their own branded U.S. dollar-backed stablecoins for a wide range of use cases like eliminating fees on cross-border transactions or payment for blockchain-based digital assets and cryptos. It’s also widely known as the digital dollar.
- Paxos Gold (PAXG) is a crypto asset backed by physical gold bars held in Brink’s vaults. Built on the Ethereum network, Paxos’ tokenized gold lets any user from any part of the world own gold by buying PAXG. The PAXG token is pegged to the price of gold in U.S. dollars.
- itBit is a crypto exchange for enterprise investors. Paxos is the name of the company and itBit is the brand name of the exchange. itBit offers two main services: a Bitcoin exchange and an over-the-counter trading desk. itBit provides API integration to third-party apps for connecting trading tools to the platform. There are a few popular cryptos available on the platform – and are used for high-volume institutional traders and investors.
The products offered by Paxos for FIs are:
Crypto for enterprises
Paxos Crypto Brokerage Services – Paxos’ crypto brokerage service is a turnkey white-label solution, which means that it can sell a customizable brokerage system to an institutional client as a complete package. Through its API for white-labeled crypto brokerage services, Paxos allows enterprises to offer their customers a simple way to buy, sell, send, and hold their crypto assets.
Stablecoin as a service – Stablecoins offer a way to bridge the gap between fiat currencies, like the U.S. dollar, and cryptocurrencies because they are price-stable digital assets that behave like fiat but maintain mobility and utility of cryptocurrency.
Paxos stablecoins help commercial banks offer real-time account settlement to their customers, and large payment processors use Paxos stablecoins to accept and settle customer payments. With Paxos’ white-labeled technology, an exchange can create stablecoins with its own brand name.
Settlement for institutions
Paxos Settlement Service – It allows institutional investors to automate their post-trade workflow (for commodities, equities, and forex markets) utilizing enterprise-grade security systems to manage the entire lifecycle of a trade.
Paxos receives a user’s trade data from an existing platform, and then it automatically sends and matches requested trades. Afterward, the system automatically calculates and verifies payment locations and delivery amounts to instantly send transfers to the user’s bank, depository, or vault.
The Paxos settlement service platform is directly integrated with broker-dealer internal systems, enabling it to instantly unlock clearing capital.
Paxos Custody Management – The Paxos Trust Company is a qualified custodian regulated in New York State and adheres to regulatory and compliance standards to see its customers’ assets are well looked after. Its fiat and crypto assets are backed by USD-equivalent capital reserves that are verified with audits. 100% of user assets are stored in cold storage.
Paxos builds enterprise blockchain solutions for institutions like:
- PayPal – Paxos powers PayPal’s crypto service for U.S. users to buy, hold and sell cryptocurrency directly from their PayPal digital wallet.
- Bank of America, Credit Suisse & Société General – BofA, Credit Suisse and Société General joined the Paxos Settlement Service, which uses blockchain technology to achieve same-day settlement of stock trades.
- Revolut – Paxos holds crypto assets for Revolut’s users in the U.S., provides access to liquidity, and offers pricing and market data for Revolut to customize the in-app experience.
Grayscale is a digital asset management firm.
It was founded in New York in 2013.
Grayscale is a subsidiary of Digital Currency Group. Grayscale is a platform for digital currency investing and cryptocurrency asset management. It provides market insight and investment exposure to the developing digital currency asset class.
- The company managed $43.6 billion worth of cryptocurrencies at the end of 2021.
- Roughly $22 billion of the firm’s assets under management reside in the Grayscale Bitcoin Trust (GBTC), which the firm is trying to convert to an ETF.
- As of 2022, Grayscale Investments has added 25 assets to a running list of investments it is considering making available to investors.
The list of products that it offers to FIs are:
Grayscale Bitcoin Trust – Grayscale’s flagship product, the Bitcoin Investment Trust (GBTC), is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin
Grayscale Bitcoin Cash Trust – An alternative approach for electronic cash
Grayscale Ethereum Trust – A decentralized, smart-contract platform designed to run decentralized applications
Grayscale Ethereum Classic Trust – Ethereum Classic is the original chain and Ethereum represents the new chain which is an offshoot of the original blockchain
Grayscale Horizen Trust – A private platform for money, messages, & media
Grayscale Litecoin Trust – A digital currency for fast, low-cost payment
Grayscale Stellar Lumens Trust – A platform that connects banks, payment systems, and people
Grayscale Zcash Trust – A privacy-enhanced currency for the digital age
The additional newer trusts that launched in 2021 are:
Grayscale Basic Attention Token Trust – BAT cryptocurrency enables users to track their interest in properties stored digitally
Grayscale Chainlink Trust – A native token of the Ethereum-based oracle service Chainlink, which facilitates the transfer of data from off-chain sources to on-chain applications
Grayscale Decentraland Trust – Decentraland’s token MANA is utilized to acquire virtual land
Grayscale Filecoin Trust – Filecoin’s tokens are used to pay to store files in a decentralized storage and distribution network
Grayscale Livepeer Trust – A network for content delivery, with applications built on Livepeer to power their video functionality
Grayscale Digital Large Cap Fund – A large-cap fund for digital asset exposure
Grayscale Decentralized Finance Fund – The fund provides investors with exposure to a selection of industry-leading DeFi protocols through a market-cap weighted portfolio designed to track the CoinDesk DeFi Index
- ETF – As of February 2022, Grayscale continues to wait for the SEC to approve the conversion of its flagship Grayscale Bitcoin Trust into a bitcoin spot ETF.
Some of the FIs that have access to the Grayscale funds are:
- Morgan Stanley – Morgan Stanley increased its Bitcoin exposure to over $300 million by purchasing additional shares of the Grayscale Bitcoin Trust for three of its funds during the third quarter in 2021.
- JPMorgan – In 2021, JPMorgan rolled out access to four funds from Grayscale Investments: Grayscale Bitcoin Trust, Grayscale Bitcoin Cash Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
6. Digital Asset
Digital Asset is a financial technology company that builds products based on distributed ledger technology for banks and other financial institutions.
It was founded in New York in 2014.
Digital Asset lets organizations globally work across boundaries, creating interconnected networks where information and assets flow freely. It is a software company that uses blockchain technology to facilitate settlement between digital and traditional currencies.
Digital Asset’s products include:
- Daml enterprise – Daml is Digital Asset’s computer language for programming smart contracts on its platform. Daml enterprise enables connectivity and synchronization with other platforms to get to market quickly with full-stack, multi-party solutions for businesses.
- Daml hub – Daml hub is a cloud platform built to help access Daml applications from small beginnings to mass adoption. It is an option for any developer who wants to build an application with a serverless experience.
- Daml 2.0 – In March 2022, Digital Asset launched Daml 2.0, the newest version of Digital Asset’s multi-party application platform. It claims to remove barriers to distributed ledger technology adoption with the availability of privacy and cross-domain interoperability.
Digital Asset is the provider of DLT to many regulated financial institutions, some of which are:
- Goldman Sachs – Goldman Sachs is using Daml to develop its end-to-end tokenized asset infrastructure supporting the digital life cycle across multiple asset classes on permissioned and public blockchains.
- ASX – The Australian Securities Exchange teamed up with Digital Asset to move its exchange platform onto distributed ledger technology.
7. Anchorage Digital
Anchorage Digital is a digital asset platform offering custody, trading, financing services, as well as staking and governance.
It was founded in San Francisco in 2017.
A federally chartered digital asset bank means it is the custodian of digital assets for financial institutions such as banks, venture capital firms, and fintechs, as well as governments. It uses biometric authentication and hardware security modules for storing and securing cryptocurrency.
- In December 2021, Anchorage Digital closed a $350 million Series D funding round, valuing it over $3 billion.
The services it offers to FIs are:
Lending, trading of digital assets, financing, staking, and governance – all integrated with regulated custody as well as the infrastructure used by companies to build cryptocurrency products.
Some of the FIs it partners with are:
- Finxact – Anchorage Digital partnered with banking core, Finxact, which allows banks and financial services providers to offer customers access to new crypto products and services.
- BankProv – BankProv is one of only a few banks in the country offering deposit services to cryptocurrency exchanges, institutional investors, and brokers. The collaboration allows Anchorage to deliver loan products to BankProv’s institutional clients backed by Ethereum.
Fireblocks is a blockchain provider for moving, storing, and issuing digital assets.
It was founded in New York in 2018.
Many crypto and digital asset businesses use Fireblocks software and APIs to custody, manage treasury operations, access DeFi, mint and burn tokens, and manage their digital asset operations. Fireblocks supports custody across 25 blockchains.
- Fireblocks scaled rapidly in 2021, growing from 150 customers to more than 800 customers, and surpassing $2 trillion in assets transferred over blockchain.
- In January 2022, Fireblocks raised $550 million in Series E funding, bringing its valuation to $8 billion.
- As of February 2022, Fireblocks announced the acquisition of First Digital, a stablecoin and digital asset payments technology platform, for a reported price of $100 million.
The services offered by Fireblocks to FIs include:
- Fireblocks Wallet Infrastructure – Fireblocks combines the MPC-CMP algorithm with hardware isolation to create a multi-layer security technology. This reduces a single point of failure and insulates digital assets from cyber-attacks, internal collusion, and human error. MPC-CMP lets the consumer customize their wallet temperature – hot, cold, or warm.
- Fireblocks Network – The Fireblocks Network lets its institutional clients connect to over 30 exchanges and over 950 tokens – with over 500 liquidity partners, trading venues, and counterparties for instant settlement, rebalancing, and payments. The Fireblocks Network combats cyber threats, internal fraud, and human error by automatically managing and rotating deposit addresses across counterparties.
- Multi-layer Security – The multi-layer security matrix layers are: MPC, Intel SGX, and the Policy Engine.
MPC-CMP private key protection layer removes the single point of compromise from both external hackers and insiders – as private keys aren’t concentrated on a single device at any point in time.
Keys stored in SGX cannot be extracted even if malware or a hacker has control over the server’s OS – as the memory space and the data in the SGX enclave are encrypted.
The Policy Engine allows organizations to set up specific approval policies for every transaction. It enables users to configure a list of rules that affect how transactions are handled and approved.
- Fireblocks DeFi – FIs get access to DeFi apps for trading, lending, and staking with enterprise-grade protection and customizable governance and policy control. Clients can design a DeFi portfolio by trading on decentralized exchanges, and implementing staking and yield farming strategies across protocols.
- Tokenization – Fireblocks enables the creation and redemption of fiat-backed stablecoins, management of smart contracts, whitelisting approval, and secure custody. Stablecoins and security tokens can be deployed with Fireblocks’ tokenization engine that manages the minting, burning, and token transfer process on Fireblocks.
- AML & Compliance – Fireblocks integrates with crypto compliance providers so its clients can automatically detect and remove high-risk transactions in their ledger.
Some Fireblocks clients include:
- Revolut – Revolut uses the Fireblocks MPC-based wallet service and network infrastructure to support crypto services for its 18 million global retail customers.
- Bankhaus von der Heydt – The 267-year-old privately owned German bank integrated Fireblocks’ custody technology in combination with the Fireblocks Network to expand digital asset and crypto service offerings to its customer base.
- FV Bank – Puerto Rico-based, digital asset custodian, FV Bank partnered with Fireblocks to integrate Fireblocks MPC-based wallet service and network infrastructure to provide digital asset custody services to its customers.