Blockchain technology and cryptocurrency are increasingly in focus at banks and financial institutions worldwide. Major banks have begun conducting pilot programs and discussions around crypto and distributed ledger tools, driven partly by regulatory clarity and competitive pressure.
Citi analysts note that “blockchain’s adoption is being driven by evolving regulation and a growing emphasis on transparency and accountability,” with banks eyeing new financial instruments such as stablecoins alongside efforts to modernize legacy systems. Many banks are exploring blockchain to streamline back-office processes and move beyond slow, paper-based systems.
In a 2024 study, UBS reported piloting its own blockchain-based payment system (UBS Digital Cash) to make cross-border payments “much more efficient and transparent,” highlighting industry interest in distributed-ledger solutions. At the same time, executives emphasize caution; banks plan only “tentative” first steps into crypto, favoring small-scale pilots and partner projects until regulation is clearer.
Banks’ interest in blockchain spans private ledger networks as well as the public crypto ecosystem. Many large banks have joined consortiums or developed permissioned platforms – from JPMorgan’s Quorum to IBM’s Hyperledger Fabric – while also watching public chains like Ethereum and stablecoins. For example, Santander launched a blockchain-based service (One Pay FX) for overseas payments using Ripple’s technology , and major U.S. banks have quietly discussed collaborating on a joint dollar-denominated stablecoin.
Central banks too are actively developing digital currencies, and banks in turn are preparing to integrate central bank digital currencies (CBDCs) and tokenized deposits into their systems. For instance, forty leading banks (including JPMorgan, HSBC, UBS and MUFG) joined a BIS-led “Agora” project to test wholesale CBDCs and tokenized bank deposits for cross-border payments. Industry observers point out that blockchain’s appeal lies in efficiency, security and transparency – “streamlined operational efficiency, better data protection and reduced fraud” – but also note challenges around fraud risk, privacy and technical hurdles.
The Range of Blockchain and Crypto Technologies Used in Banks
Banks employ a broad spectrum of blockchain and crypto technologies, from private distributed ledgers to public networks, each serving different roles.
Public vs. Permissioned Blockchains
Many banks favor permissioned (private) blockchains, which restrict participation to verified members and allow control over access and privacy. For instance, UBS’s cross-border “Digital Cash” payments pilot was built on a private blockchain network accessible only to authorized participants.
Permissioned platforms like JPMorgan’s Quorum (an enterprise Ethereum) or R3’s Corda let banks share ledgers without exposing data publicly. In contrast, public blockchains (Bitcoin, Ethereum) are permissionless and open to anyone, offering broad liquidity but less confidentiality.
Banks generally use public chains indirectly – for example, holding cryptocurrencies for clients or using public networks for token issuance – but many financial applications run on permissioned networks to meet privacy and regulatory requirements.
Cryptocurrencies and Digital Assets
Banks are gradually adding cryptocurrencies to their services. Several institutions now offer custody and trading of major digital currencies like Bitcoin and Ether to select clients, recognizing market demand.
For example, JPMorgan, Goldman Sachs, and Standard Chartered have launched crypto trading platforms or custody services for clients. However, banks remain cautious about holding large crypto positions internally, due to price volatility and unclear regulation.
As a result, some banks have focused instead on stablecoins – crypto-tokens pegged to fiat. Many big banks are researching stablecoins for faster settlements; notably, JPMorgan Coin (“JPM Coin”) is already used to instantaneously move fiat-equivalent tokens on the bank’s own ledger. In mid-2025, media reports indicated that the Wall Street Journal had learned U.S. banks including JPMorgan, Bank of America, Citi and Wells Fargo were in early discussions about jointly issuing a regulated stablecoin. Such stablecoins, operating 24/7 and backed by dollars, could allow banks to transfer funds more quickly than traditional wire systems. In practice, blockchain’s promise in banking often involves combining these tokens with private ledgers: Santander’s blockchain service uses Ripple’s interledger messaging (on RippleNet) to route payments, even though banks have so far shunned using XRP directly .
Tokenization of Assets
Tokenization – representing real-world assets on a blockchain – is another focus area. Banks have long piloted tokenized deposits, bonds, or other securities to gain liquidity and round-the-clock trading. For example, Citi reported it has experimented with tokenized money market funds and bonds, and has a live pilot for tokenized deposits to enable 24/7 transfers outside banking hours.
Analysts at HSBC and Northern Trust predicted that 5–10% of global financial assets could be tokenized on blockchains by 2030. In trade finance, banks are backing platforms to digitize letters of credit and invoices. A prominent case is we.trade – a consortium (including CaixaBank, Deutsche Bank, HSBC, KBC, Nordea, Rabobank, Santander, SocGen, UBS, and others) that built a Hyperledger Fabric network to simplify export-import funding.
Tokenization promises faster settlement and transparency; as a Citi executive noted, blockchain aims “to replace existing centralized systems with streamlined operational efficiency, better data protection and reduced fraud”. Still, broad industry pilots have shown tokenized trading scales slowly, with banks mainly using such tokens for internal liquidity management rather than large market volumes .
Stablecoins and CBDCs
Beyond private stablecoins, central banks around the world are advancing central bank digital currency (CBDC) projects. Commercial banks are keenly watching these developments, since wholesale CBDCs could become new settlement rails. Many central banks (including the ECB, Bank of Japan, and Federal Reserve) have published CBDC design papers or begun pilots. Notably, a global pilot (Agora) initiated by the BIS and IIF involves 44 countries and dozens of banks to test interoperability of tokenized CBDCs and bank deposits.
Similarly, the Swiss National Bank’s Project Helvetia has successfully run multiple digital bond issuances on a wholesale CBDC ledger with six banks (including UBS and Commerzbank), and the SNB has signaled expanding the program as more banks join.
These initiatives indicate that banks are preparing for a future where digital fiat currencies – rather than just cryptocurrencies – may underpin cross-border and large-value payments. In emerging markets, China’s e-CNY pilot is already extensive (trillions of yuan in transactions ), and banks in Asia are integrating with those platforms.
Decentralized Finance (DeFi) Integration
Decentralized Finance – smart-contract lending, trading and payments on public blockchains – remains largely distinct from traditional banks, but it is beginning to attract attention in regulated finance.
Few banks directly deploy DeFi protocols, but some are exploring related ideas in permissioned contexts. For example, banks have studied automated liquidity pools and tokenized credit on private chains to enable 24/7 financing.
JPMorgan’s Onyx unit, for instance, joined MakerDAO’s governance board to help craft rules for institutional use of Ethereum-based lending. Meanwhile, large players develop hybrid models: digital asset exchanges and custodian banks work to integrate on-chain services under regulatory oversight. In essence, banks are watching DeFi innovations – like tokenized loans or liquidity staking – for efficiency gains, but practical adoption is still emerging and carefully vetted.
Pros and Cons of Adopting Blockchain and Crypto in Financial Institutions
Blockchain offers financial institutions clear benefits, but it also presents substantial challenges.
Advantages
The immutable, distributed ledger can vastly improve efficiency. By creating a single “golden record” for transactions, banks can reduce costly reconciliation and speed up settlements. Accenture estimated that using blockchain across securities processing and compliance could cut banks’ infrastructure costs by 30–50%.
Smart contracts promise automation of manual tasks (payments, credit checks, KYC) and auditability: every transaction is cryptographically time-stamped and verifiable. For example, trading platforms like we.trade enable automated execution of letters of credit, slashing paperwork and delays. Banks also value blockchain’s security and transparency: as a distributed system secured by cryptography, a well-designed blockchain can resist tampering and improve fraud detection. JPMorgan highlights that JPM Coin “reduces clients’ counterparty and settlement risk” by tokenizing cash on-chain.
Moreover, new crypto tools allow banks to offer innovative services (crypto custody, tokenized investment products) that appeal to tech-savvy clients and open new revenue streams. As UBS noted of its blockchain pilot, it aims to make payments “much more efficient and transparent” than legacy rails , a sentiment echoed across the industry.
Drawbacks
Despite these upsides, banks worry about key downsides. Cryptocurrency markets remain volatile, raising concerns about asset price swings and liquidity.
Regulators have warned banks explicitly to be “wary of volatility, legal uncertainty and liquidity risks” when dealing with crypto. Indeed, many executives (like JPMorgan’s Jamie Dimon) cite money-laundering and market abuse risks inherent in crypto networks.
Permissioned blockchains mitigate some risks, but they can sacrifice privacy and decentralization. Banks face significant integration challenges: connecting blockchains to core banking systems and legacy processes is complex, and scaling solutions to enterprise volume can be difficult. Citi’s analysts caution that blockchain still carries “vulnerability to potential fraud, confidentiality concerns and secure access to digital assets” as key risks.
There are also operational hazards – smart contract bugs or protocol outages could disrupt services – and legal uncertainties since many crypto laws are still evolving. Finally, customer expectations are a factor: converting clients to new blockchain-based experiences requires education and trust. Banks must therefore balance blockchain’s promise against these regulatory, technical and business hurdles.
7 Blockchain and Crypto Technologies Used by Banks
Ripple (XRP)
Ripple’s suite of cross-border payment tools is notable among banks, though adoption of its native token XRP has been limited.
Ripple offers two main products: xCurrent (a messaging and settlement system) and xRapid (which uses XRP for liquidity). Santander’s One Pay FX service is built on Ripple’s network (xCurrent), enabling faster international transfers between the bank’s subsidiaries. In a 2016 R3-led trial, a consortium of banks (including Barclays, RBC, Santander and others) successfully used XRP to rebalance liquidity: banks converted fiat into XRP and back to execute instant cross-border payments, reportedly saving up to 60% in funding costs.
However, Ripple’s executives acknowledge that “xRapid and XRP are not being used by banks” currently ; those pilots mainly involved money-transfer companies. Some Asian banks (via SBI Ripple Asia) and fintechs have integrated RippleNet messaging, but most institutions have hesitated to hold XRP due to its crypto status. Thus, Ripple’s blockchain has mainly been tested for payments efficiency and 24/7 liquidity, even as banks await clearer regulation of cryptos.
JPM Coin and Onyx by JPMorgan
JPMorgan’s Onyx business has developed several blockchain solutions, led by the JPM Coin project and its Quorum-based networks. In 2019 JPMorgan launched JPM Coin – a digital token pegged 1:1 to the U.S. dollar – for instantaneous settlement among institutional clients.
When a client transfers funds on the bank’s ledger, the sender hands over JPM Coins that the receiver then immediately redeems for dollars, enabling trustless real-time transfers and lowering settlement risk.
As JPMorgan’s Umar Farooq explained, the bank sees a “unique opportunity” to build this capability responsibly under regulatory oversight. Beyond JPM Coin, Onyx has built blockchain services for broader cash management. Notably, Siemens (in Germany) and other corporate clients are already using JPMorgan’s blockchain platform to move money globally in real time. JPMorgan is expanding these services into Switzerland and beyond, expecting to onboard corporate customers onto its blockchain network in the near future. On the interbank side, JPMorgan’s Quorum (a permissioned Ethereum fork) underpins its Interbank Information Network (IIN, now Liink) involving hundreds of banks , and is being used to prototype new cross-border settlement systems with partners in Australia and Canada.
In sum, JPMorgan has fully embraced private-chain solutions: JPM Coin for tokenized cash and Onyx platforms for payments and trade, while still steering clear of owning open cryptocurrencies itself.
Ethereum / Quorum
Ethereum, the leading smart-contract platform, also finds use in banking – chiefly through permissioned variants. Several banks have built or participated in private Ethereum-based networks.
For instance, Quorum (developed by JPMorgan) is essentially an enterprise Ethereum with added privacy features. Bloomberg reported that ConsenSys acquired Quorum in 2020 and that JPMorgan continues to support it as an open-source project.
Beyond JPMorgan’s work, banks are members of the Enterprise Ethereum Alliance and have used Ethereum for tokenization pilots. A key example is the Komgo platform (founded by banks and energy traders) which uses Quorum to automate commodity trade finance (approving KYC and issuing digital letters of credit). Moreover, some international funds and bond issuers have used Ethereum testnets: Societe Generale issued a retail bond as a security token on Ethereum in 2019.
JPMorgan itself publicly endorsed Ethereum’s potential by noting Quorum’s roots in Ethereum. In practice, banks appreciate Ethereum’s mature smart-contract capabilities and large developer ecosystem, but deploy it in permissioned, regulated settings to maintain compliance.
Hyperledger Fabric
Hyperledger Fabric (an open-source blockchain framework from the Linux Foundation) is widely used in trade and finance consortia. Designed for private networks, Fabric lets permissioned entities run smart contracts without a public token.
A prominent banking use-case was we.trade, a trade finance platform jointly launched by a dozen banks (including Santander, HSBC, Société Générale, UBS, Nordea, KBC and others) and IBM. We.trade’s network – built on IBM’s blockchain platform running Hyperledger Fabric – enables European exporters to automate letters of credit, track shipments and manage payments across borders with minimal paperwork. By registering trades on the shared ledger, banks involved in we.trade could significantly cut processing time and risk.
Other banks have used Fabric or similar frameworks for supply-chain finance and compliance projects.
For example, Barclays and other banks have collaborated with IBM on a Fabric-based repo market platform, and HSBC/ING have joined consortia using Hyperledger for various trade-use cases. While Hyperledger Fabric lacks a native cryptocurrency, it provides the secure, modular environment banks need for tokenizing assets and automating contracts in joint ventures (with automated consensus but without mining).
R3 Corda
R3’s Corda is another permissioned distributed ledger platform, tailored for financial institutions. R3 consists of a consortium of 100+ banks and institutions dedicated to building Corda applications. In 2017, R3 and 22 major banks (Barclays, HSBC, Citi, RBC, Santander, etc.) announced a joint prototype for cross-border payments on Corda.
The idea was to let banks settle payments in minutes on a shared ledger, eliminating traditional correspondent banking delays. Corda’s architecture is designed to handle large transaction volumes and privacy between parties. While initial R3-backed projects focused on trade and asset tokenization, R3 also launched the Marco Polo network (for trade finance) and the Voltron initiative (for letters of credit).
Several global banks use Corda in pilots: Natixis, for example, stated it was “exploring initiatives” in cross-border payments on Corda, believing in the promise of distributed ledger payments. More recently, R3 has been expanding its platform to integrate with public blockchains like Solana for greater interoperability.
In banking, Corda’s strength is its industry backing (members include most large Western banks) and its focus on multi-party workflows. Several central banks have even used Corda to simulate tokenized financial market infrastructures in pilot projects.
Central Bank Digital Currencies (CBDCs)
CBDCs are digital forms of fiat currency issued by central banks, and banks are actively preparing for them.
Around the world, nearly every major currency is exploring or piloting a CBDC. Commercial banks are participating in wholesale CBDC tests, where CBDCs circulate only among banks, as a way to revolutionize settlement. For example, the Atlantic Council reported that all G20 nations are researching CBDCs and 44 countries had active pilots as of 2024.
Some banks are already building the rails: a consortium of 40 banks (JPMorgan, HSBC, UBS, MUFG, etc.) joined the G7/BIS “mBridge/Agora” project to test a platform combining tokenized CBDCs and bank deposits for cross-border transfers. In Switzerland, the Swiss National Bank’s Project Helvetia involves six banks (UBS, Commerzbank, etc.) issuing and settling digital bonds on a wholesale CBDC platform. On the retail side, banks in the eurozone and U.S. are awaiting the ECB and Fed moves: the ECB expects to finalize the digital euro framework by 2026 , after which retail payments via CBDC could transform consumer banking.
In Asia, banks have already interfaced with China’s e-CNY pilot – currently the largest CBDC trial – as businesses accept digital yuan payments. Ultimately, CBDCs could give banks new ways to provide accounts and credit; banks may hold retail CBDC accounts, and use wholesale CBDCs to settle large transactions instantly and reduce central-bank reserves.
Chainalysis and Crypto Compliance Tools
As banks venture into crypto, they rely heavily on blockchain analytics and compliance software.
Specialized firms like Chainalysis, Elliptic, and CipherTrace provide tools to monitor blockchain transactions and flag illicit activity, helping banks meet anti-money-laundering (AML) rules.
For example, Chainalysis’s monitoring platform is used by financial institutions to “track flows of cryptocurrency” in real time. These analytics tools map addresses to real-world entities and can detect ransomware, terrorist funding or sanctions evasion. Banks’ AML and fraud departments integrate these platforms to screen client crypto-transfers and on-ramp transactions. As regulators increase crypto oversight, automated compliance systems become essential. JPMorgan and other large banks invest in these analytics tools or partner with fintechs to ensure every crypto trade passes strict KYC/AML checks. In essence, Chainalysis and peers are the plumbing that allows traditional banks to safely enter the digital-asset space, by translating opaque blockchain data into actionable compliance intelligence.
Closing Thoughts
Blockchain and cryptocurrencies are poised to reshape financial services, with banks moving beyond experiments to concrete deployments. Major global banks are now running live pilots, from blockchain-based cross-border payments (UBS Digital Cash) to tokenized securities (Swiss digital bonds) and CBDC networks (mBridge/Agora).
The narrative has shifted: where executives once dismissed blockchain as hype, today they acknowledge its potential to cut costs and improve transparency. Yet adoption remains selective.
Banks typically deploy permissioned blockchain solutions in areas like trade finance and cash management (as seen with we.trade, Quorum and R3 projects), rather than relying on public cryptocurrencies. They are also cautious adopters, mindful of regulatory and integration challenges. For now, the industry focus is on “money-legos” that connect legacy systems with new digital rails – in other words, building out hybrid models that combine blockchain’s strengths with existing banking infrastructure.
Looking ahead, the blockchain landscape in banking is likely to deepen. As stablecoins and CBDCs mature, banks may handle digital cash just as they do paper currency today, transforming settlement and customer services. Cross-border payment networks are evolving to include tokenized deposits, as 40+ banks demonstrated in the BIS-led trials.
Analysts predict that as regulatory frameworks solidify, more institutions will integrate tokenization for assets and explore blockchain-based capital markets. The next few years could see banks offering seamless on-chain services – for example, tokenizing mortgages or trade invoices for 24/7 processing. However, banks will continue balancing innovation with caution. The consensus view is that blockchain will gradually supplement, rather than replace, traditional banking rails. As one industry report noted, 2025 could be the year blockchain adoption takes off in earnest, much like the impact seen recently from AI – provided regulators and technologies align favorably. In the meantime, banks will keep piloting and partnering, building the infrastructure to ensure they remain at the center of finance even as the plumbing becomes digital.