The big players also want to participate in the world of cryptocurrencies.

It has been a little over a year since the bankruptcy of cryptocurrency banks Silvergate and Signature, and the interest of financial institutions in the crypto sector has increased significantly. PayPal has begun using its own stablecoin to make payments to auditors at Ernst & Young LLP, employing a system provided by SAP. Meanwhile, Visa is working to connect current fiat currencies with blockchains through its Visa Tokenized Asset Platform (VTAP).

Since the collapse of those banks, a lot has happened in the crypto space. We have seen the emergence of a Bitcoin ETF, an increase in the involvement of cryptocurrency enthusiasts in politics, and a cycle of mini booms and busts in Bitcoin prices. It’s plausible to think that PayPal and Visa have been developing these initiatives for some time, but their focus on stablecoins is noteworthy, suggesting that major industry players are betting on them and creating their own versions, rather than using those produced by companies like Tether or Circle.

Visa emphasizes that VTAP is a cutting-edge solution created by the company's blockchain experts, allowing banks to "create, destroy, and transfer fiat-backed tokens, such as tokenized deposits and stablecoins, and explore various applications." This platform is expected to be operational by 2025, and BBVA has already expressed its intention to use it to launch its own stablecoin.

The rise of these technologies also aims to facilitate cross-border payments; the senior vice president of blockchain at PayPal has mentioned this aspect. Moreover, JPMorgan Chase and Citigroup have been developing their own blockchain capabilities, and tokenized money market funds are anticipated. Additionally, banks plan to use the Swift messaging network to test digital asset transactions next year.

Although many of these experiments have been conducted outside the United States, it seems that cryptocurrencies are increasingly close to integrating into the banking industry. One example of this is the Bank of New York Mellon's approach to implementing custody services for Bitcoin and Ether, in support of ETFs. The motivation for banks to get involved is clear, as they can charge up to ten times more for cryptocurrency custody compared to normal assets.

The crypto sector can be viewed as a tide industry, with capital flowing during boom periods and retreating in times of bust. Given the growing institutional interest, one might wonder if this could be an indication of a new boom. However, the proximity of a crypto boom to the banking industry could also imply that a downturn would be felt more acutely in that environment, something that those connected to Silvergate and Signature know all too well.