Traditional capital markets firms will have to change fee structures, suffer short-term revenue losses from intermediary functions and potentially suffer near-term balance sheet disruption.
That’s the warning from Franklin Templeton’s boss in an audacious comment piece, penned for Fortune magazine.
Jenny Johnson, chief executive of the asset management group, said she understands why embracing digital asset technology is “daunting” for many global financial institutions, but underscored that the revolution is now very much underway.
“The truth is, much of the sector hopes crypto will prove to be a fleeting technical fad like Blu Ray, so it can stick to business as usual,” she said.
“Public blockchains are evolving into hyper-efficient co-ordination machines poised to replace aspects of legacy financial infrastructure.”
Johnson cites Solana as one of the first institutionally-focussed blockchains to be capable ot processing the required number of transactions per sector and also Sui.
“For legacy financial firms, the task of embracing digital asset technology is a daunting one. It means altering our fee structures and potentially losing revenues associated with intermediary functions, rethinking our product offerings and, quite possibly, disrupting our near-term balance sheets as we learn to operate on blockchain and hold cryptocurrencies to pay for block space.”
Johnson also warned that some market participants may disappear completely.
“Decentralized exchanges, like Uniswap, that allow peer-to-peer market-making without a custodian are nipping at the heels of their centralized counterparts in the legacy world, processing trillions of dollars of transactions each year.
“As these systems become faster, their verification and security features have experienced significant improvements that make them not only resistant to hacks but also better at proving identity and asset ownership.”
