IBM, known for pitching banks and blue-chip firms on private blockchain technology (the sector’s equivalent of alcohol-free beer) is taking decisive steps toward working with the hard stuff.
The 110-year-old computing giant is licensing its software to METACO, a Switzerland-based firm that specializes in custodying digital assets for financial institutions, the companies said Thursday. This is the business of safeguarding the cryptographic private keys that control a cryptocurrency wallet, the 21st-century version of protecting a vault full of gold bars.
Separately, Deutsche Bank, Europe’s eighth-largest bank, is enlisting IBM’s help to build its planned crypto custody and trading services offering, two people familiar with the arrangement told CoinDesk. The parties are close but no deal is signed yet.
These are not IBM’s first steps into crypto custody; Big Blue has been quietly making moves into digital asset safekeeping since at least early 2019. Most recently, IBM’s Cloud Hyper Protect was teaming up with Zug, Switzerland-based decentralized finance (DeFi) data oracle, DIA (Decentralised Information Asset).
IBM’s further wading into these waters speaks to a broader change in the posture of corporates toward crypto. In the late 2010s, the preferred approach for banks and other large companies was to try to shoehorn blockchain, the decentralized recordkeeping method pioneered by Bitcoin creator Satoshi Nakamoto, into their processes to create more efficient databases. Like many big companies, IBM enthusiastically backed the enterprise blockchain trend, which has turned out to be a slow and relatively fruitless grind.
Meanwhile, financial institutions have woken up to public blockchains and crypto assets, and that’s where the action is, the sector’s well-known volatility and manifold operational and regulatory risks notwithstanding. Banking being the biggest client industry sector at IBM, it’s the natural infrastructure choice for most banks and large financials looking for a toehold in the growing crypto asset space.
“Large enterprises are going to focus on where the rapid growth of demand is, and right now that is on decentralized finance services on public blockchains,” said Paul Brody, blockchain lead at consulting giant EY. “Firstly, transaction-centric banks want to offer crypto assets to their customers, and secondly, firms want to tokenize traditional assets, and plug them into the DeFi.”
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