In the mid-2010s, a few large banks started developing applications that would run on the Ethereum open-source distributed ledger. For instance, a team at JPMorganChase built Ethereum protocol Quorum to be used to facilitate interbank payments in 2016, later sold to Consensys four years later. The following year, a group of banks and blockchain startups—including JPMorganChase, Banco Santander, BNY Mellon, BBVA, Credit Suisse and UBS—started the Enterprise Ethereum Alliance to build, promote and support Ethereum-based technology, and at its height the group had about 200 bank members.
They were looking for efficiency, immutable records and better communication between, say, parties to a supply chain, a correspondent loan or an international payment. The Ethereum platform is a decentralized, open-source blockchain that lets developers build and run decentralized applications using smart contracts without intermediaries, sometimes using its native cryptocurrency, ether. For several reasons, including leadership turnover, rivalry between banks, scaling issues and the difficulty of finding a return on investment, these projects mostly fizzled out or turned into something else. But with the inauguration of President Donald Trump last year came a renewed interest in integrating crypto into the traditional financial system.
The more crypto-friendly atmosphere has revived banks’ dormant interest in Ethereum (as well as Solana and other distributed ledgers). More than 30 banks, including Bank of America, Citi, TD Bank Group and Wells Fargo, are collaborating with SWIFT on a blockchain-based platform that will use Ethereum for cross-border transactions. JPMorganChase lets its institutional clients send and receive money using its tokenized deposit JPMCoin on Base, an Ethereum Layer-2 blockchain built within Coinbase, while Citi, Vantage Bank and Custodia Bank use Ethereum technology for tokenized, bank-backed U.S. dollar deposits, and Citi has also developed a Hyperledger-compatible ledger. Solana has emerged as a competing option, with Visa settling in USDC on Solana, Anchorage Digital partnering with Western Union to launch a Solana-based stablecoin, and JPMorganChase using Solana for tokenizing commercial paper. Industry observers say momentum toward Layer-2 adoption and, ultimately, clearer regulation for bank-backed tokens will continue to shape how traditional finance integrates crypto technology.
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