&rippleOliverWymanNAVIGATINGCRVPTOHowfinancial intermediariescan integratecryptoassets FOREWORDBrooks Entwistle, SVP Global Customer Success, RippleNetBrad Chase, Senior Director Engineering, Liquidity HubThe financial services industry is at a key inflection point. As the crypto industry continuesto mature spawning new use cases, applications, and business models banks, creditunions, payment service providers and fintechs will be presented with a unique opportu nityto establish their position at the intersection of crypto and traditional financeIn order to position themselves strategically, it's essential for banks and financialintermediaries to understand how companies and consumers interact with cryptoassetstoday, the capabilities (both technical and organizational) required to facilitate thisinteraction, the role service providers can play in helping develop these capabilitiesand howthe space mayevolvein thefuture.We're excitedto equip financial institutionswith knowledge along these dimensions through the following commissioned researchFurthermore, we are excited to release Ripple Liquidity Hub this year to help businessescapture the opportunity crypto presents. For businesses and financial institutions that arethemselves, Liquidity Hub offers a technical platform through which companies of anysize can buy, sell, or hold crypto internally or on behalf of their customers through onecryptoassets,includingBitcoinandEtnereum.We're looking forward to partnering with financial institutions in their exploration of cryptobanking services using the knowledge and experience we've acquired over the past decadelargest financial institutions. KEYTERMINOLOGYCryptoassets are assets built on permissionless blockchains, meaning they have nopermissioned" issuer. This includes cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH)and qovernance tokens, stablecoins, and non-fungible tokens (NFTs)blockchain technology, and central bank digital currencies, which are being developed inchoicesin centralbanksCentral bank digital currencies (CBDCs) are digital assets issued by central banks thatmay trade on a blockchain, The idea of issuing digital assets with crypto-like features isbeing taken seriously by central banks around the world, including the Federal Reserve,the European Central Bank, and China's PBOC. Different central banks are researching andexperimenting with different modelsStablecoins are privately issued cryptocurrencies pegged to a fiat currency and typicallybacked by liquid assets denominated in that fiat currency. They enable owners to easilytransfer and store fiat-denominated value over permissionless blockchains withoutconverting to fiat. They are widely used with a market capitalization of nearly s180 billion forthe top five stablecoins.'Decentralized finance (DeFi) refers to smart contractprotocols that provide financialservices such as borrowing, lending, and market making.Centralized finance (CeFi) refers to crypto native financial intermediaries that offer tradingand intermediate demand from institutions and DeFi protocols for cryptoassets with aintermediaries rather than third parties mediated by smart contracts as in DeFiprotocolsI.TooSahlecoin TnkensbyMarietCanitelirCoinmarkcn.zoz Navigating CryptoINTRODUCTIONpeer-to-peer version of cash that would eliminate the need for financial institutions andother trusted intermediaries, Many of the early adopters of Bitcoin and other cryptoassetsthat have come since have viewed these innovations as a means to disrupt the traditionalbanking system.Over a decade later, cryptoasset adoption has soared but these non-traditional financialinstruments have not replaced the traditional banking system. We find and will explore inthis paper that most owners of cryptoassets would prefer to interact with their digital assetsthrough the trusted and convenient relationships they have with their financial institutionsN otably, our research suggests that there are as many as 65 million Americans who alreadyown or are interested in cryptoassets, and who would prefer to interact with cryptoassets viatheir bank. Globally, this figure is much larger, especially in markets where the difficulties ofaccessing cryptoassets are a barrier for most customers.Banks and other traditional intermediaries have shown interest in building capabilities toserve the demonstrated demand for cryptoassets today and to position themselves for afuture in which digital assets could become more important building blocks of financial marketremain extremely limited in both scope and scale.crypto services are becoming more accessible, particularly for the largest banks and financialintermediaries that are able to build capabilities in-house. But many institutions, particularlysmaller to medium-sized financial institutions, will need to rely on service providers to realizeany ambitions in this space. Fortunately, there is a growing set of service providers that haveemerged only recently to meet this dema