Financial Services Firms Among Leaders in Blockchain Adoption

Investors looking for usage cases for blockchain technology beyond the cryptocurrency space may want to consider sector-level examinations. With that approach, they’re likely to discover that financial services are one of the epicenters of its adoption.

There are myriad applications for blockchain in the traditional financial services industry and that could bode well for the Amplify Transformational Data Sharing ETF (BLOK). The actively managed exchange traded fund is posting impressive gains in 2024, helped in large part by the bitcoin rally, but there’s more to the ETF’s story and that of the broader blockchain investment thesis.

What makes the intersection of blockchain and old guard financial services firms potentially alluring to investors considering BLOK for the long-term are at least two factors. First, a variety of asset managers, banks, and the like are committed to it. Second, many of the biggest firms in the industry are embracing this technology.

Big Banks, Others Banking on Blockchain

Blockchain Coinvestors’ recently released Institutional Digital Finance Adoption Report highlights the broad-based adoption of blockchain technology by the world’s 50 largest financial services firms as measured by assets under management.

Perhaps furthering the allure of BLOK’s blockchain inroads is the point that the adoption of this technology in the financial services sector is global in nature.

“In Asia, 100% of major Chinese banks are already live with digital wallets and digital yuan support while 50% of Japanese banks have live offerings,” according to the report. “Despite conservative public stances, about 35% of American institutions in the top 50 already support most digital asset services and nearly 70% support digital commodities, following the launch of recent US BTC ETFs.”

Those top 50 financial institutions manage a combined $123 trillion in assets under management – a staggering sum and one that confirms there are significant resources that can facilitate broader long-term adoption of blockchain technology.

Of course, many market participants want to know what’s happening here and now. When it comes to financial services furthering the use of blockchain technology and potential implications for BLOK member firms, the news is encouraging. Digital wallets and support of central bank digital currencies (CBDCs), among other factors, tell that tale.

“Over 50% already provide or support digital wallets, custody, and/or trading,” noted Blockchain Coinvestors of the 50 largest financial services firms. “Over 40% already support digital monies, such as CBDCs and/or stablecoins.”

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