GreenTech is reshaping finance by fusing technology with sustainability. From startups to large financial institutions, there’s a clear push to embed climate intelligence into financial decisions. In 2024, green fintech investments hit USD 2.7B – underscoring strong momentum and growing confidence in tech-led sustainability solutions.
The focus is sharp: drive financial innovation while delivering real environmental impact.
Here’s a look at key Green Finance trends that are reshaping the industry.
Click here to download “The Future of Finance is Digital – and Sustainable” as a PDF.
Catalysing Change: Impact Investing
Impact investing is going mainstream, especially in fast-growing emerging markets.
This shift reflects a growing realisation: private capital is critical to climate action, and tackling climate risks is a financial opportunity, not just an ethical choice.
AVPN (Asian Venture Philanthropy Network) has launched ImpactCollab – a platform linking finance professionals with verified impact organisations, due diligence tools, and monitoring resources. Initially used by private banks in Singapore to bolster philanthropy advisory, it will soon expand into blended finance and impact investing, backed by MAS.
Green bonds are also gaining momentum, driven by investor demand, regulatory tailwinds, and rising climate risk awareness. In Singapore, NUS, UOB, and Northern Trust piloted tokenised green bond reporting to boost transparency. India, meanwhile, opened its sovereign green bonds to foreign investors via the Fully Accessible Route (FAR), unlocking global capital for climate goals.
Empowering Customers with Carbon Insights
Carbon tracking is becoming a staple in digital banking, driven by a growing demand for transparency around environmental impact. Banks are responding by embedding carbon calculators into apps – enabling users to measure emissions, benchmark against national averages, and get actionable tips to reduce their footprint.
In Indonesia, Bank Mandiri has launched an in-app feature that helps customers track their personal carbon emissions, making it easy to understand the environmental impact of daily actions. The Royal Bank of Canada has partnered with a carbon management platform to offer businesses tools to monitor and manage their emissions.
These moves reflect a broader shift: banks are embedding sustainability into everyday financial behaviour and deepening customer engagement through purpose-driven services.
Blockchain-Enabled Carbon Trading
Blockchain is transforming carbon trading by enabling a decentralised, transparent, and secure way to verify and transact carbon credits.
This technology addresses long-standing issues of fraud and inefficiency, offering a more reliable and cost-effective approach to managing credits and meeting climate goals.
Thailand has eased crypto regulations to promote blockchain-based carbon trading, positioning itself as a leader in sustainable tech. Meanwhile, US-based financial services firm Northern Trust has launched a blockchain platform that allows project developers to generate, verify, and trade voluntary carbon credits in near real-time. Together, these moves signal a shift toward mainstream adoption of blockchain in carbon markets.
Addressing the Climate Risk Gap
As climate risks intensify, small and medium enterprises (SMEs) are seeking tools to assess and manage their exposure. Despite being highly vulnerable to climate events, SMEs often lack the resources to navigate complex risk landscapes.
Fintechs are stepping in with climate risk-scoring tools that help SMEs identify vulnerabilities and take proactive steps – such as securing insurance or adapting their strategies.
Marsh has highlighted the need for SME-focused climate assessments in New Zealand, particularly for high-risk sectors. Its Climate Risk Navigator helps businesses build resilience and make informed decisions on insurance and sustainability. In India, insurers like ICICI Lombard are using geospatial tech – GIS, satellite imagery, and AI – to power climate-linked products. For example, its satellite-based insurance for wheat farmers in Punjab enables faster, more accurate yield assessments and claim settlements.
Rise of Climate-Conscious Crypto
Once criticised for high energy use, crypto mining is undergoing a green makeover – fuelled by surplus renewable energy and optimised by AI.
What was seen as wasteful is now being reimagined as a tool for grid stability and sustainable growth.
In Switzerland’s Canton of Bern, Bitcoin mining is being explored as a way to absorb excess power and stabilise the grid. In the UK, mining firms are tapping into unused wind energy during off-peak hours to avoid waste. This shift is reaching emerging markets too – Pakistan is converting surplus electricity into value by launching state-backed Bitcoin mining and AI data centres, turning untapped power into economic opportunity.
Ecosystm Opinion
Becoming truly sustainable presents a unique challenge for financial organisations, as their responsibility extends beyond internal operational efficiencies to actively empowering customers and the wider ecosystem to embrace green practices. This is compounded by a growing reliance on increasingly compute-intensive and energy-inefficient technologies.
The recent and growing emphasis on Green Finance offers a promising outlook, suggesting a positive shift in the industry’s trajectory towards a more sustainable future.
This year’s theme at the ETHDenver – one of crypto’s OG annual gatherings, was “Year of the Regenerates.” This captures the core tension in Web3: the casino vs. the computer. On one side, the pump-and-dumps, meme coin frenzies, and hyper-financialisation. On the other, the cypherpunk ideals of decentralisation, open infrastructure, and a freer, fairer web.
It’s a timely moment for reflection. Crypto prices are tanking alongside global markets, Bitcoin is down, and headline scandals – like the USD1.3B hack of ByBit and millions lost by retail investors to the meme coin mania – paint a bleak picture.
But the full story isn’t just chaos and collapse. There’s real momentum beneath the noise – and a dose of optimism is exactly what the space needs right now.
ByBit: Green Shoots Amidst the Biggest Hack
The crypto market has seen renewed bearish sentiment, intensified by the USD1.5 billion ByBit hack on February 21, 2025 – the largest crypto heist to date, reportedly carried out by North Korea’s Lazarus Group. Notably, the attack’s impact was limited thanks to Copper’s Clearloop custody infrastructure, which protected user funds through its bankruptcy-remote design.
Yet despite the headline-grabbing loss, several market watchers have pointed to unexpectedly bullish signals emerging from the aftermath.
- Reduced Leverage and Market Stability. A potential silver lining is the decline in leverage across the market. With meme coin fatigue setting in, investors may be shifting toward more sustainable strategies. This could pave the way for long-term capital, especially as independent advisors begin recommending crypto and ETF products.
- Liquidity Injection from Loss Coverage. ByBit CEO Ben Zhou confirmed the company is covering 80% of the stolen funds through bridge loans. Some view this as bullish, arguing that while the stolen ETH remains on-chain, ByBit’s repurchases inject fresh liquidity into the market.
- No Bank Run and Trust in Exchanges. The lack of a bank run after the hack signals strong trust in ByBit’s solvency and response. Despite being one of the biggest heists in crypto, ByBit’s handling has been steady – prices have held, and users haven’t rushed to withdraw. That, in itself, is a positive sign. CEO Ben Zhou echoed this confidence, stating: “ByBit is solvent even if the loss isn’t recovered. All client assets are 1:1 backed.”
- Unexpected Positive Spin: Hacks as Catalysts. A contrarian view suggests that hacks, despite their damage, can drive platform evolution. This hack, for instance, could be seen as bullish – profit was extracted from value extractors, pushing ByBit to strengthen, become more anti-fragile, and reset stale positions and liquidity. The takeaway: crises can spark necessary resets and infrastructure upgrades – an unexpected upside in an otherwise negative event.
While some views may be unconventional, they underscore a maturing market better equipped to handle challenges, offering optimism for long-term recovery and growth beyond the current value and liquidity fluctuations.
Institutional Adoption Peaking Despite Bearish Sentiment
The tokenisation of real-world assets (RWAs) and the growing institutional adoption of digital assets are gaining momentum, even amid broader bearish sentiment in the crypto market. Driven by technological innovation, clearer regulations, and tangible benefits like enhanced liquidity, cost efficiency, and streamlined operations, these trends continue to evolve. Here’s an overview of the latest developments:
- Tokenisation of Real-World Assets. Despite bearish sentiment, the RWA tokenisation market is set for rapid growth. Analysts like Clearpool’s Ozean predict tokenised RWAs could hit a USD 50 billion market cap by 2025, driven by TradFi moving on-chain. Other forecasts from Standard Chartered (USD 30 trillion by 2034) and Boston Consulting Group (USD 16 trillion by 2030) highlight long-term potential, even if short-term conditions are volatile.
- Expansion of Asset Classes. Tokenisation is expanding beyond U.S. Treasuries and stablecoins to include real estate, private credit, commodities, carbon credits, and intellectual property. Real estate tokenisation, for example, is unlocking liquidity in traditionally illiquid markets, with platforms showing savings in home equity lines of credit (HELOCs) and collateralised loans. The total value locked in tokenised assets surpassed USD 176 billion in 2024, a 32% increase, with non-stablecoin assets growing 53%.
- Stablecoins as the “Killer App”. Stablecoins, pegged to assets like the U.S. dollar or treasuries, are becoming a safe haven in crypto. Their stability during market downturns has boosted their reputation as a “killer app” for blockchain, shifting focus from speculative tokens to practical, low-volatility tools. With a market cap surpassing USD 200 billion in 2025, Tether (USDT) and USD Coin (USDC) lead the way. New entrants like PayPal’s PYUSD (launched 2023) and treasury-backed stablecoins (e.g., Ondo Finance) are making waves. The “PayFi” race is on, with stablecoins integrating yield-bearing features linked to tokenised treasuries.
- Technological Advancements. Blockchain platforms are evolving, with AI driving RWA tokenisation and decentralised public infrastructure (DePIN). AI tools are enhancing risk assessment, compliance, and trading, making tokenised assets more attractive to institutions. Multi-chain technologies are improving interoperability and scalability, overcoming past limitations.
- Notable Projects and Milestones.
- BlackRock’s BUIDL Fund. Launched in March 2024, this tokenised fund became the largest of its kind, managing USD 657 million in assets by January 2025. BlackRock is also investing in tokenisation firms and exploring stablecoins, signalling a strategic shift.
- Clearpool’s Ozean. This protocol processed over USD 650 million in loans in Q4 2024, with a 51% rise in total value locked, reflecting growing traction.
- T-RIZE Group. In December 2023, the firm tokenised a USD 300 million residential project in Canada, showcasing real estate tokenisation at an institutional level.
- JPMorgan. Using its Onyx platform for blockchain-based settlements, tokenisation is now seen as a “killer app” for efficiency.
- Goldman Sachs. Its Digital Asset Platform is tokenising bonds, and repo transactions with Broadridge and J.P. Morgan total trillions monthly.
- Deutsche Bank. Joined Singapore’s Project Guardian in May 2024 to tokenise assets, reflecting institutional global interest.
- Regulatory Progress as a Catalyst. While regulatory uncertainty remains, 2025 shows promise. The potential appointment of crypto-friendly figures under a Trump administration could accelerate clarity in the U.S. Meanwhile, the Financial Action Task Force (FATF) is developing standards for tokenised RWAs, fostering cross-border adoption. Countries like Switzerland, Singapore, and Japan are already testing tokenised financial products, creating a more favourable regulatory environment.
- Institutional Sentiment and Investment Surveys. Institutional confidence is high. A BNY Mellon survey found 97% of institutional investors believe tokenisation will revolutionise asset management. EY-Parthenon research shows two-thirds of institutions are already invested in digital assets, with larger asset managers (AUM > USD 500 billion) launching tokenised funds. The Tokenised Asset Coalition found 86% of Fortune 500 executives recognise tokenisation’s benefits, with 35% actively pursuing projects.
- Bridging TradFi and DeFi. RWAs are bridging traditional and decentralised finance. Stablecoins tied to tokenised assets (e.g., treasuries) mitigate volatility, attracting cautious institutional players. Partnerships like Ripple and Archax aim to bring hundreds of millions in tokenised RWAs to the XRP Ledger, highlighting the convergence of TradFi and DeFi.
Resilience Amid Bearish Sentiments
Despite bearish market conditions driven by crypto volatility and macro pressures like inflation, institutional adoption is gaining momentum. Tokenisation offers tangible benefits – fractional ownership, 24/7 trading, and faster settlements – that solve inefficiencies in traditional systems. These advantages hold steady, regardless of market sentiment. For example, tokenised repos minimise operational errors and unlock intraday liquidity, while tokenised yields, such as treasuries, now outpace DeFi lending rates, drawing capital even in a “crypto winter.”
Regulatory fragmentation and security risks like hacking and smart contract vulnerabilities still pose challenges, while mainstream adoption, though accelerating, trails behind pilot successes.
Yet, the fundamentals remain resilient. With upcoming upgrades like Solana’s Firedancer client and Ethereum’s Pectra, blockchain infrastructure will advance. The focus for web3 builders will shift back to innovation, not token price charts. The path from meme coins to real utility may be long, but with the talent and creativity within the ecosystem, it’s far from impossible.
2024 was a pivotal year for cryptocurrency, driven by substantial institutional adoption. The approval and launch of spot Bitcoin and Ethereum ETFs marked a turning point, solidifying digital assets as institutional-grade. Bitcoin has evolved into a macro asset, and the ecosystem’s outlook remains robust, with signs of regulatory clarity in the US and increasing broad adoption. High-quality research from firms like VanEck, Messari, Pantera, Galaxy, and a16Z, has further strengthened my conviction.
As a “normie in web3,” my perspective comes from connecting the dots through research, not from early airdrops or token swaps. While the speculative frenzy, rug pulls, and scams at the “casino” end are off-putting, the real potential on the “computer” side of blockchains is thrilling. Events like TOKEN2049 in Dubai and Singapore highlight the ecosystem’s energy, with hundreds of side events now central to the experience.
As the web3 ecosystem evolves, new blockchains, roll-ups, and protocols vie for attention. With 60 million unique wallets in the on-chain economy, adoption is set to expand beyond this base. DeFi transaction volumes have surpassed USD 200B/month, yet the ecosystem remains in its early stages, with only 10 million users.
Despite current fragmentation, the future looks promising. Themes like tokenising real-world assets, decentralised public infrastructure, stablecoins for instant payments, and the convergence of AI and blockchain could reshape finance, identity, infrastructure, and computing. Web3 holds transformative potential, even if not in marketing terms like “unstable” coins or “unreal world assets.”
The Decentralisation Paradox of Web3
Decentralisation may have been a core tenet of web3 at the onset but is also seen as a constraint to scaling or improving user experience in certain instances. I always saw decentralisation as a progressive spectrum and not a binary. It is, however, a difficult north star to maintain, as scaling becomes an actual human coordination challenge.
In Blockchains. We have seen this phenomenon manifest with the Ethereum ecosystem in particular. Of the fifty-plus roll-ups listed on L2 Beat, only Arbitrum and OP Mainnet have progressed beyond Stage 0, with many still not posting fraud proofs to L1. Some high-performance L1s and L2s have deprioritised decentralisation in favour of scaling and UX. Whether this trade-off leads to greater vulnerability or stronger product-market fit remains to be seen – most users care more about performance than underlying technology. In 2025, we’ll likely witness the quiet demise of as many blockchains as new ones emerge.
In Finance. On the institutional side, some aspects of high-value transactions in traditional finance or TradFi, such as custody, need trusted intermediaries to minimise counterparty risk. For web3 to scale beyond the 60-million-odd wallets that participate in the on-chain economy today, we need protocols that marry blockchains’ efficiency, composability, and programmability with the trusted identity and verifiability of the regulated financial systems. While “CeDeFi” or Centralised Decentralised Finance might sound ironical to most in the crypto native world, I expect much more convergence with institutions launching tokenisation projects on public blockchains, including Ethereum and Solana. I like underway pilots, such as one by Chainlink with SWIFT, facilitating off-chain cash settlements for tokenised funds. Some of these projects will find strong traction and scale coupled with regulatory blessings in certain progressive jurisdictions in 2025.
In Infrastructure. While decentralised compute clusters for post-training and inference from the likes of io.net can lower the cost of computing for start-ups, scaling decentralised AI LLMs to make them competitive against LLMs from centralised entities like OpenAI is a nearly impossible order. New metas such as decentralised science or DeSci are exciting because they open the possibility of fast-tracking fundamental research and drug discovery.
Looking Back at 2024: What I Found Exciting
ETFs. BlackRock’s IBIT ETF became the fastest to reach USD 3 billion in AUM within 30 days and scaled to USD 40 billion in 200 days. The institutional landscape now goes beyond traditional ETFs, with major financial institutions expanding digital asset capabilities across custody, market access, and retail integration. These include institutional-grade custody from Standard Chartered and Nomura, market access from Goldman Sachs, and retail integration from fintechs such as Revolut.
Stablecoins. Stablecoin usage beyond trading has continued to grow at a healthy clip, emerging as a real killer use case in payments. Transaction volumes rose from USD 10T to USD 20T in a year, and yes, that is a trillion with a “t”! The current market capitalisation of stablecoins is approximately USD 201.5 billion, slated to triple in 2025, with Tether’s USDT at over 67% market share. We might see new fiat-backed stablecoins being launched this year, such as Ethena’s yield-bearing stablecoin, but I don’t expect USDT’s dominance to change.
RWAs. Even though stablecoins represent 97% of real-world assets on-chain and the dollar value of all other types of assets is still insignificant, the potential market for asset tokenisation is still a staggering USD 1.4T, and with regulatory clarity, even if RWAs on-chain were to quadruple, the resulting USD 50B will be a sliver of the overall opportunity. We can expect more projects in asset classes such as private credit – rwa.xyz is a great dashboard to watch this space.
DePIN. Decentralised public infrastructure across wireless, energy, compute, sensors, identity, and logistics reached a USD 50B market cap and USD 500M in ARR. Key developments include the emergence of AI as a major driver of DePIN adoption, the maturation of supply-side growth playbooks, and the shift in focus toward demand-side monetisation. More than 13 million devices globally contribute to DePINs daily, demonstrating successful supply-side scaling. Notable projects include:
- Helium Mobile: Adding 100k+ subscribers and diversifying revenue streams.
- AI Integration: Bittensor leading decentralised AI with successful subnets.
- Energy DePINs: Glow and Daylight addressing challenges in distributed energy systems.
- Identity Verification: World (formerly Worldcoin) achieving 20 million verified identities.
These trends indicate significant advancements in the web3 ecosystem, and the continued evolution of blockchain technologies and their applications in finance, infrastructure, and beyond holds immense promise for 2025 and beyond.
In my next Ecosystm Insights, I’ll present the trends in 2025 that I am excited about. Watch this space!
The fundamentals of Web 3.0 are deeply rooted in technology that is ever-changing and continuously evolving. Web 3.0, powered by blockchains and crypto, is the Internet’s biggest technological upgrade since it became mainstream in the 1980s.
What is Web 3.0 and Why Does it Matter?
Web 1.0 (1990-early 2000s) – READ. The early Internet was characterised by an open-source protocol like HTTP, where the value accrued to the users and builders. In this era, technology companies such as Google, Yahoo and Amazon made their mark by layering on services such as search, directory listings and media publishing over an open-source infrastructure, essentially creating an online version of the offline world. The core contributors to digital media were mainly journalists, writers and reporters who reproduced pieces of their print content in a digital format. There was very little censorship during this period and the information was available mainly as databases.
Web 2.0 (early 2000-today) – READ & WRITE. This phase witnessed a wave of tech advancement, upgrades to servers, faster Internet speeds, development of complex APIs, algorithms and code to create peer-to-peer opportunities, user-generated content and social networking. Services such as Facebook and Twitter began monetisation of the increased user base through digital advertising. The years 2007-2012 saw a mobile revolution with Apple providing users with their first iPhone in 2007 and opened doors to third-party apps and builders. Facebook’s mobile pivot in 2012 amplified user social connectivity tremendously.
The tech architecture for Web 2.0 is built on a client-server protocol, where users are the clients, contributing content and the companies control the servers. The core functionality of the early Internet which was open for anyone to use and build on, has now transformed where the authority rests in the hands of the few. The rise of the creator economy is dependent on the frameworks developed by centralised companies. Software and hardware upgrades and renunciation of data and privacy rights by users to platforms have further accelerated centralisation of power. The Web 2.0 ecosystem now has a monopolistic culture where the companies decide who can participate, in what capacity, and how much value to share with stakeholders. Consumers do not have any ownership of their data or control over how it gets used; while creators give up rights to their content and do not have the ability to export their fanbase out from the platforms they have used, to interact with their communities. There is no incentive alignment between corporations and networks, and the users have no say in the platforms’ economics and governance. Web 2.0 is an Internet era built on ‘rented land’ where users don’t own anything.
Web 3.0 (2020 onwards) – READ, WRITE and OWN. Web 3.0 is a new computing platform, a paradigm shift towards a more democratised Internet, which is owned by the users and builders who create and transfer value in a trustless and decentralised way, facilitated through tokens. It is re-engineering the Internet’s open protocol and leveraging its architecture to benefit people rather than corporations.
The Core Components of Web 3.0
In order to understand the importance of Web 3.0 as technological innovation, it is essential to learn about its core components – tokens and blockchains.
Tokens are pieces of code that are used to transact over a blockchain and provide a record of digital ownership. They can be fungible and non-fungible. Fungible tokens are interchangeable (fiat currency, cryptocurrencies like Bitcoin). Non-Fungible tokens are unique, i.e no two tokens are alike (such as pieces of art).
The genesis of the blockchain architecture was developed by a pseudonymous individual named Satoshi Nakamoto in 2009, who developed a peer-to-peer electronic cash system called Bitcoin (the blockchain), that uses its native token (BTC) to transact over its network. Blockchain is a decentralised distributed ledger system, where transactions are executed and recorded in a series of immutable blocks on an interconnected network of nodes (computers).
Blockchains can be imagined as supercomputers that process thousands of transactions in exchange for incentives or tokens that accrue to miners and validators as rewards. Tokens are a new digital asset class that is increasingly seen as a store of value (Bitcoin), means of exchange (Ethereum, Solana and alternative cryptocurrencies), social currency (Rally.io) and several other use cases that offer utility and monetisation abilities to creators, entertainers and artists.
Future Value Drivers
Since 2020, we have seen the growth of cryptocurrencies and blockchain adoption by institutions and retail investors due to the decoupling of crypto into various value drivers like Decentralised Finance (DeFi), Non Fungible Tokens (NFTs) and Decentralised Autonomous Organisations (DAOs).
DeFi. DeFi refers to a financial system that runs on blockchain technology, and uses smart contracts that replace the need for traditional financial (TradFi) businesses to act as intermediaries. Core functions such as lending, borrowing. and transacting takes place seamlessly without the need for banks to execute the transactions. DeFi runs on code, a set of rules that are predefined on smart contracts. Users of the decentralised protocol own the network and participate in the rewards through token distribution. Tokens are distributed as incentives to users who are contributors to the network. There are strong differences between DeFi and TradiFi on trust, transparency, identity and access.
NFTs. NFTs are a record of ownership of digital assets on a blockchain. Technological advancements to the Bitcoin Blockchain genesis architecture and the introduction of smart contracts to blockchains such as Ethereum enabled a new use case of tradeable programmable tokens to emerge in the crypto landscape.
NFTs have been transformational to digital asset ownership and saw exponential growth in user adoption in 2020. A key milestone event in the history of NFTs is the USD 69 million sale of ‘Everydays: the first 5000 days’, by digital artist Beeple at an art auction organised by Christie’s in March 2020. Transaction volumes have now surpassed nearly USD 13 billion.
NFT represents anything digital that’s unique (non-fungible), has value, can be traded and its ownership secured on a blockchain. NFTs most commonly represent digital art, but they can be digital wearables, in-game virtual objects, a contract deed attached to a property, a domain name, or even a piece of writing such as this insight! For the first time, it is possible to exchange value between two trustless individuals anywhere in the world without them needing to disclose their identities or establish any contact and have asset ownership transferred and recorded on a blockchain.
DAO. A DAO is a community that is created and managed by its members who band together to achieve a common objective. Web 3.0 has enabled a dynamic shift in behavioural economics which is drawing people to it. The shift can be described as triabism at times but has been fascinating. The ongoing pandemic made more people spend time online and in the Metaverse, connect with others and also create. That happy place is called a DAO, where humans meet to share, connect, and drive value in a digital world known as the Metaverse.
Here are some ways that a DAO differs from a corporate. Companies are governed by a hierarchical system whereas DAOs are run like cooperatives in a flat structure. Company management takes decisions whereas DAO members vote on proposals to take collective decisions. Companies hire talent that meets certain criteria whereas anyone can join a DAO if they hold the DAO tokens/NFT or get invited to join the community. Companies compensate their employees with salaries whereas DAOs reward contributors with tokens.
The Future of a Decentralised Economy
Web 3.0 is transforming the economics of the creative, media and entertainment industry by changing the dynamics of how value gets created and distributed. It is an Internet that works for stakeholders who own it and create value for themselves. The shift from Web 2.0 to Web 3.0 is taking place more rapidly than the previous evolution of the Internet. The power dynamics and value generation are fundamentally changing how we view the Internet.
Web 3.0 is inevitable!
The ongoing global crisis is expected to drive more investments in FinTech. Blockchain adoption, in particular is expected to lead to a more open and interconnected economy that is borderless, transparent and does not need counter-party trust to operate. One particular area where Blockchain has been piloted is in smart contracts. Financial contracts involve legal work, document handling, sighting, signing, and sending them to the right people. All of this involves both time and people – and proves to be an expensive option eventually. Blockchain can speed this process up in a secure (with no failure points), interoperable and risk-free environment.
While smart contracts are expected to increase efficiency, there are questions being raised with respect to interpretation and technical capacity. The Law Commission in the UK is conducting a detailed study to analyse how current law applies to smart contracts and to highlight any uncertainties or gaps in relation to enforceability, interpretation and so on. The World Bank is looking at the role smart contracts could play in improving financial services in poorer nations – especially in insurance and short-term unsecured loans. Initiatives such as these are a positive step towards adoption.
However, smart contracts are not the only area that financial institutions and governments have in mind when they pilot and adopt Blockchain – and there are several recent instances.
Digital Currency
Many central banks have started identifying potential use cases for digital representation of fiat money that offers them unique advantages at various levels. According to Bank of International Settlements (BIS), 80% of the world’s central banks had already started to conceptualise and research the potential for central bank digital currencies (CBDCs), 40% are working on proofs-of-concept (POCs) and 10% are deploying pilot projects. The People’s Bank of China (PBOC) announced last month that it has processed more than three million digital yuan transactions since it began piloting its CBDC late last year. Transactions include bill payments, bar code scans, tap and go payments, and payments for transport and government services.
Singapore’s Project Ubin has successfully completed its fifth and final stage and is a step closer to greater adoption and live deployments of blockchain technology. The commercial applications of the payments network prototype include cross-border payments in multiple currencies, foreign currency exchange, settlement of foreign currency-denominated securities, as well as integration with other blockchain-based platforms to enable end-to-end digitalisation across many industries and use cases.
Crypto Exchange Ecosystems
A crypto exchange or digital currency exchange (DCE) makes it easier for buyers and sellers to securely store, buy, sell, or exchange crypto currencies. Various players across the financial industry have developed tools connecting the transactions, flow of funds, and financial instruments through crypto exchanges – including banks, digital payments and other FinTech providers.
In an effort to expand its retail presence, FTX acquired crypto app Blockfolio for USD 150 million in August 2020. Recently, FTX announced the launch of trade in the stocks of some of the largest global companies – Tesla, Apple, Amazon – by tokens against bitcoins, stablecoin and more.
In order to empower the emerging initiatives in the decentralised finance (DeFi) space, the world’s largest crypto exchange platform Binance announced the creation of a seed fund in September. Their USD 100 million accelerator fund added five new Blockchain projects – Bounce, DeFiStation, Gitcoin, JustLiquity and PARSIQ that will receive financial support from the fund.
PayPal has announced crypto buying and selling services through Paypal accounts. Paypal’s crypto service in partnership with Paxos is being rolled out in phases across the US. Outlining their plans for 2021, Paypal announced new crypto payments features including enhanced direct deposit, check cash, budgeting tools, bill pay, crypto support, subscription management, buy now/pay later functionalities and more with the integration of the capabilities offered by Honey – an internet browser extension and mobile app which PayPal bought for USD 4 billion in 2019.
It is expected that banks will join in as well – it has been reported that DBS Bank in Singapore is planning to launch a digital asset exchange platform to enable institutional and retail customers to trade cryptocurrencies.
Blockchain Enhancing Banking Features and Services
We are also witnessing several pilots and initiatives in banking industry functionalities such as settlements, identity management, security, transparency, and data management.
In theory, the bank reconciliation is simple, however, in practical aspects things may not work out so easily. The funding, lending, transfer, and transactions reconciliations is a complicated and time-consuming effort. in March 2020 the Spunta Banca DLT system promoted by the Italian Banking Association (ABI) and coordinated by ABI Lab was implemented across the Italian banking sector. Powered by R3’s Corda Enterprise blockchain, the solution streamlines and automates the reconciliation of transactions, provides real-time reconciliation process, handles technical elements with automated feedback and results in more transparent processes. Spunta has attracted broad interest from the Italian banking sector and since October, around 100 banks have been operating on Spunta to manage the interbank process and automate reconciliation of transactions.
Recently, in Spain, ten leading banks including Banco Santander, Bankia, BME, CaixaBank, Inetum, Liberbank, Línea Directa Aseguradora, Mapfre, Naturgy and Repsol, and the Alastria consortium have come together to build a self-managed digital identity (ID) solution dubbed as Dalion built on Blockchain technology. The project based on Alastria digital identity model (Alastria ID) aims to provide users with secure control on their digital information and personal data, making it easier for them to manage their digital identity. The project that was initiated in October 2019, has successfully completed the concept testing phase and is in its second phase, with the final solution expected to roll-out in mid-2021.
Grayscale, is the first digital currency investment vehicle to attain the status of a Securities and Exchange Commission reporting company. The digital assets management company is aggressively buying bitcoins and manages a total of USD 8.2 billion of cryptocurrency. Earlier this year, Singapore’s Matrixport, a financial services firm partnered with Simplex, an EU-licensed payments processing firm to enable buying of cryptocurrencies via VISA or Mastercard credit and debit cards with more than 20 supported fiat currencies.
As Blockchain matures we will see more large-scale adoption bringing collaborators together to form ecosystems that will give them a competitive edge. Solve some of their core challenges and empower their customers.
Singapore FinTech Festival 2020: Infrastructure Summit
Get more insights into the evolution of blockchain and its applications at the Singapore FinTech Festival 2020: Infrastructure Summit. The world’s largest fintech event will explore different uses of blockchain technology, trials being conducted, and the vast opportunities in the financial services industries
