Global banks are bringing traditional and decentralized finance together as they race to devise the plumbing of a new financial system.
The world of finance is de-bifurcating. On one side stands the bedrock of TradFi (traditional finance): established security and compliance. On the other, the velocity of DeFi (decentralized finance): 24/7 efficiency and programmable money. The question is when these two worlds will merge, not if.
Banks are racing to bring them together, driven by a powerful trifecta: maturing technology, a clearer regulatory landscape, and most critically, a roar of sustained client demand. The strategy for bridging the gap is clear: build the foundational infrastructure, secure the assets via custody, and develop compelling institutional trading products.
As they do so, global banks including JPMorgan Chase, Goldman Sachs, HSBC, and Societe Generale are laying the foundational plumbing for a new financial system, leveraging blockchains to move money and assets for greater speed and lower cost. Each is adopting a slightly different strategic focus.
Different Banks, Different Playbooks
JPMorgan, through its Kinexys platform, uses a private distributed ledger for high-volume, cross-border payments tokenized as JPM Coin, focusing on 24/7 programmability and integrating digital identity for compliance: an internal, tokenized settlement rail for wholesale banking.
Goldman Sachs has focused on derivatives, trading, and platform creation via its GS DAP (Digital Asset Platform) for digital bond issuance, which it plans to spin out into an industry utility.
HSBC and Societe Generale are bridging TradFi and digital formats. HSBC’s Orion platform tokenizes real-world assets (RWA) like gold and bonds, creating a “digital vault” for asset management and fractionalized trading. SG-FORGE by Societe Generale connects to public blockchains, notably by issuing the EU-compliant stablecoin, EUR CoinVertible (EURCV). Making EURCV available on external crypto exchanges creates a direct, interoperable settlement pipe linking DeFi liquidity with regulated interbank settlements.
These initiatives collectively digitize core banking functions, constructing the tokenization infrastructure for what their devisers hope will be the future of finance. Integrated tokenization platforms that marry the security of TradFi with the efficiency of digital ledger technology can make banking safer, faster, and programmable, they argue.
Citi Integrated Digital Assets Platform (CIDAP), for example, enables firm-wide development and testing of use cases and capabilities across digital assets while meeting institutional-grade security and compliance needs. Built on an internal, blockchain-agnostic infrastructure, CIDAP bridges traditional applications and blockchains. By offering digital asset services directly via traditional client integration channels, it eliminates the need for clients to manage complex blockchain technologies.
Citi Services’ digital assets strategy is always driven by two “North Stars”: meeting client needs and ensuring safety and soundness, says Biswarup Chatterjee, global head of Partnerships and Innovation, Services. “The shift to digital assets is fundamentally a response to evolving commercial models and the desire for 24/7 financial support,” he explains.
While Citi is building internal infrastructure to upgrade its internal banking rails, Standard Chartered has built standalone companies to service the open crypto market. Institutional clients want access to cryptocurrencies like Bitcoin via a trusted banking partner, says René Michau, global head of Digital Assets: “This preference is often rooted in fiduciary requirements or internal policies that steer them away from unregulated crypto exchanges.”
Standard Chartered’s digital asset solutions, leveraging capabilities built by Zodia Custody, are deployed in response to identified client requirements, adds Margaret Harwood-Jones, global head, Financing and Securities Services: “For us, client-sector knowledge, a comprehensive business understanding, and proven expertise in today’s post-trade space remain fundamental building blocks in developing the right product propositions.”
In addition to solving problems for clients, digital assets can create new revenue streams.
Standard Chartered is excited about the tokenization of money market funds, citing a successful collaboration with China Asset Management to increase distribution to retail clients in Hong Kong. This not only drives new revenue, says Harwood-Jones, but it increases liquidity, offers opportunities for managing collateral quicker, and promotes financial inclusion.
Bank-Grade Digital Money
Stablecoins and tokenized deposits are emerging as foundational elements for instantaneous settlement.
Strong client adoption has greeted Citi’s launch of tokenized deposits via Citi Token Services, Chatterjee reports. Citi Token Services for Cash uses interbranch tokenized deposits to enable real-time, 24/7 instant payments, significantly enhancing liquidity management. Further demonstrating its momentum, Citi announced in November that the platform is integrating euro transactions and expanding its footprint to Dublin, enabling clients to transfer both US dollars and euros globally.
Thanks to developments such as these, an increasing volume of capital market flows incorporate blockchain-based settlement, crypto investment, and the tokenization of funds, says Amit Agarwal, head of Custody, Citi Investor Services. Banks like Citi are finding their opportunity in the continuing necessity of a trusted, central provider to safeguard these emerging assets.
“Our clients consistently express a desire for the same bank-grade security, safety, and compliance they currently experience when dealing with traditional assets,” says Agarwal. “Therefore, as the digital asset space expands, the requirement is to maintain this identical standard of safety and security.”
A central issue in the DeFi revolution is how to build trust and ensure compliance in a new, borderless ecosystem. Standard Chartered’s brokerage model for crypto trading provides clients with regulated access, Michau notes; a bank-facing solution offers a specific, regulated risk profile, which differentiates it from an unregulated crypto exchange.
The lack of a verified identity layer, by contrast, has been a primary barrier to widespread digital asset adoption.
The Global Legal Entity Identifier Foundation (GLEIF) addresses this concern with its Verifiable Legal Entity Identifier (vLEI), which makes identity and credentials portable across multiple infrastructures, creating a “trust anchor” to verify legal person identification, says Alexandre Kech, CEO of GLEIF. Solving “verification of identity” is key to enabling mass tokenization, he argues, because it allows the ecosystem to confirm details like “is an accredited investor” in real-time, moving away from heavy upfront processes.
Adding the ‘Trust Layer’
The need for trust extends to the assets themselves. Kech highlights the risk of fake tokens and copycats like the phony JPM coin that appeared hours after the real one was issued, underscoring the need for smart contracts that can reliably link a token to its legitimate issuer: a capability that can be developed within platforms like CIDAP.
As the world’s leading custody bank, BNY Mellon aims to serve as the “trust layer” for the evolving digital economy; its core strategy is to provide an agnostic platform for all assets, digital and traditional alike, by offering secure safekeeping and administration. Citi, likewise, expects to launch a dedicated digital assets custody capability this year, starting with crypto assets and validated by a recent successful live pilot transaction involving secure custody of Ethereum tokens.
DBS, meanwhile, operates a proprietary DBS Digital Exchange (DDEx), offering trading, custody, and tokenization services to accredited investors and aims on expanding its DBS Token Services for programmable payments to institutional treasuries.
The integration of TradFi and DeFi is not a distant goal but a present reality, catalyzed by sustained client demand for 24/7 efficiency and institutional-grade security. As major institutions move beyond experimentation to build robust, interoperable infrastructure and tokenization platforms, they are positioning themselves not merely as participants, but as the architects of a tokenized future that is both safe and accessible.
