Blockchain technology has attracted billions of dollars in investments from banks and investors, but concerns about implementation and scalability has hindered many blockchain projects so far.
Wells Fargo, the fourth largest bank in the U.S. is developing a USD-linked stablecoin that will run on the firm’s first blockchain platform to keep track of payments within its internal network. Its international locations will also be able to move funds between each other using the token.
The project, slated for 2020, will start with transfers of U.S. dollars, but is expected to expand to other currencies. Eventually, it also aims to reach all Wells Fargo branches worldwide.
The system will allow the bank to bypass third parties in the asset transfer process saving costs and time. It is expected to be used in a pilot initially for internal settlement across the company’s business. The bank’s corporate clients will not have to make any changes to the way they interact with the bank since the currency will not be client-facing.
Growing Demand for Cryptocurrency
As banking services become increasingly digital, Wells Fargo sees “a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that,” said Lisa Frazier, head of the Innovation Group at the company.
“We believe DLT holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.”
Though Wells Fargo executives may have been bullish on the potential for blockchain technology in financial services today, but the company has been more skeptical of cryptocurrencies like bitcoin; In 2018, Wells Fargo ban the purchase of Bitcoin by credit-card customers, due to the volatility of the investment. Wells Fargo has also previously launched other blockchain projects, including a banking prototype and a trade finance platform aimed at the cotton market. It’s also invested in a blockchain finance start-up.