Adoption of Blockchain-Based Technologies Gains Momentum –Moody’s
Adoption of blockchain-based technologies and digital assets steadily gains momentum, according to Moody’s Investors Service report.
It noted that the move was accelerated by the global pandemic, large-scale digital transformations in the financial services and corporate sectors – including investments in online banking, digital platforms, and blockchain-based supply chain solutions – are changing the way financial institutions operate.
Speaking to the blockchain and digital asset industry trends, the global rating firm said Institutional adoption is growing, noting that financial institutions are developing blockchain infrastructure that increases speed and efficiency of fund transfers, among other benefits.
Manufacturing firms are employing blockchain to improve the traceability of goods across the whole supply chain, it said in the report. According to Blockdata cited, Moody’s said 81 of the top 100 publicly traded companies have adopted blockchain in their business model.
Asset managers expand footprint in digital asset market, it stated. In recent years, three of the top four global asset management firms have announced digital asset product releases or investment in firms active in the digital asset space.
In 2022, for example, BlackRock partnered with Coinbase to make Bitcoin trading and services accessible to institutional clients, adding that tokenization broadens access to illiquid assets.
Use of tokenization, it explains is the process of transforming ownership rights of an asset into a digital token – which Moody’s says is growing, allowing a broader range of investors to own portions of illiquid investments.
Between 2020 and 2022, daily trading volume of digital assets grew from to $150 billion from $30 billion, according to the report.
On-chain debt issuances still limited, according to the report. Issuing bonds as digital records on a blockchain ledger has the appeal of potentially reducing the number of intermediaries involved in each transaction, thereby reducing costs.
However, global regulatory standards and significant investment in new platforms are needed before such issuances can take place with more regularity. READ:Nigeria’s Public Finance Starts Falling Since 2016 –Moody’s
It said cryptocurrencies, blockchain technology have some benefits in payments. It noted that conversion-free cross-border payments is one use case in which cryptocurrencies, including stablecoins, can lower costs and broaden access to financial services.
Investment rises in crypto, blockchain sectors in 2022, despite market turbulence. Despite the huge collapse of the crypto markets since early 2022, total global investment activity – including venture capital, M&A and private equity – at the halfway point of the year was still significantly higher than in any year before 2021.
