What can blockchain technology do for financial services in a regulatory friendly environment?
And with a new boss coming in 2025, the ecosystem is about to find out. Donald Trump has a promise To the industry that — the United States Securities and Exchange Commission (SEC) under his administration – will be more suitable for cryptocurrencies.
Against the backdrop of traditional financial players warming their cold shoulders towards the blockchain space, when banks discuss real-world use cases for cryptocurrencies, they tend to default. Stablecoins for payments.
For example, on Thursday (November 7), UPS She announced that she had Created and tested UBS Digital Cash, a blockchain-based payment solution, while the day before on Wednesday (November 6), JP Morgan Announced a major promotion to its blockchain platform, which was recently rebranded from Onyx to Kinexys.
But that’s not all that JP Morgan announced. The banking giant also issued a white paper The EPIC project is titled: Enhancing Token Finance through On-Chain Enterprise Privacy, Identity, and Composability (EPIC).
The paper, as the title suggests, explores the use of blockchain technology to enhance privacy, identity and composability within financial ecosystems.
“Our goal is twofold: to clarify the challenges and opportunities in this area and to stimulate dialogue and action at the industry level,” the bank said.
As the regulatory landscape evolves, this appears to be an increasingly common view among traditional financial institutions.
Read more: Pro-Crypto President: What Trump 2.0 Holds for the Future of Blockchain
Unleash the full potential of tokenized assets
One of the primary advantages of blockchain technology is transparency – a double-edged sword in finance. The open nature of blockchains provides a high degree of trust and visibility, allowing anyone to verify transactions. However, the lack of privacy represents a significant obstacle for many potential users, especially institutional participants who are wary of sharing sensitive financial information publicly.
In a world where sensitive financial data and transactions may increasingly come under cross-chain public scrutiny, there is an urgent need to address privacy and identity challenges within cryptocurrencies.
According to the JP Morgan paper, “The lack of mature on-chain crypto privacy solutions, coupled with the absence of consensus around the implementation of privacy-preserving digital identity, continues to create operational friction in tokenized asset interactions. While these challenges are not entirely comprehensive – as evidenced by From the $2-3 billion raised through on-chain funds and around $200 billion in stablecoins, protocol vaults, and public chain lending protocols – solving them could expand adoption.”
And in an interview with PYMNTS published on Friday (November 8): Raj DamodharanExecutive Vice President of Blockchain and Digital Assets at MasterCardHe explained that the true potential of blockchain can only be realized when users are able to interact with the network in a reliable and verifiable way.
“But while Basic infrastructure He added: “It enables you to transfer value, but it is not suitable for doing so in a very easy way,” noting that “experiments are difficult.”
Such as PYMNTS Intelligence Latest report Regulated and exposed industries, including healthcare and financial services, must adhere to several requirements, such as know your customer (KYC), anti-money laundering (AML), and data privacy regulations. Blockchain technology can help these industries in this regard.
Read more: Visa, PayPal and others can bring utility and legitimacy to stablecoins
How solving privacy and identity challenges can expand adoption
“Privacy-preserving, reusable digital identity solutions are key to unlocking the full potential of tokenization, enabling simplified onboarding, real-time verification, and programmable compliance,” the JPMorgan report noted.
However, this journey requires a collaborative effort from developers, regulators and industry stakeholders to ensure these solutions are technically feasible and regulatory compliant.
In the near term, the momentum of stablecoins, protocol vaults, and cross-chain lending demonstrates the viability of the system.
PYMNTS recently sat down with Ran GoldieSenior Vice President of Payments and Network at Fire blocksand Nicholas PleikasHead of Marketing, Visa Cryptocurrencies, to analyze the benefits and myths surrounding blockchain-based payments, how to think about real-world applications and how to unlock new revenue streams using blockchain technology. Stablecoins, the panelists said, Provide benefits on existing payment systems, including native programmability, robust auditability, fast settlement, self-storage options, and seamless interoperability.
However, as tokenization becomes more integrated with the financial sector, privacy and identity will shift from “nice to have” to basic requirements. Meeting these needs will be key to fostering a secure, scalable, and inclusive ecosystem where token assets can truly thrive.
