American bank Citizens has stated that blockchain technology has the potential to accelerate global GDP by eliminating the “friction tax” in payments, settlement, recordkeeping, and ownership verification.
“We believe that the adoption of blockchain can drive economic growth through increased capital velocity, a more expansive and innovative investment landscape, and infrastructure that meets the needs of an increasingly digital and AI-driven world,” said analysts led by Devin Ryan in a report released on Tuesday.
The bank’s analysts highlighted a trend of major institutions implementing on-chain infrastructure. They specifically mentioned the New York Stock Exchange’s plan to introduce a tokenized securities platform that would enable 24/7 trading of U.S. equities and ETFs with almost instant settlement, pending regulatory approval.
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This move indicates that traditional market operators are integrating blockchain technology into their core systems to seize new opportunities and defend against disruption, according to the analysts.
The report suggests that the economic impact of blockchain will be initially seen through increased capital velocity. Continuous markets and near-instant settlement can decrease locked collateral and counterparty risk, freeing up balance sheets and enabling the same capital to support more economic activities.
Over time, tokenization can broaden the range of investable assets by making it cost-effective to issue, trade, and finance assets that are currently illiquid or operationally complex. This includes both traditional securities and new asset classes related to the digital economy, as well as more efficient on-chain collateral for lending.
Tokenization involves converting real-world assets into blockchain-based tokens.
Blockchain technology is in line with the growing digital and AI-driven economy.
As automation leads to an increase in machine-initiated transactions, the bank argues that always-on, programmable blockchain networks are well-suited to meet the rising demand for real-time settlement, authentication, and auditability at scale.
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