The firms providing the foundation stones for the future of global finance

Our “future of finance” theme represents the intersection of finance, technology, and the infrastructure required for digital assets. It focuses on firms driving innovation and transformation in finance to create the digital economy of tomorrow.

These companies are steadily building the infrastructure that may, someday, run and operate significant portions of the global financial system. They span several segments of the digital economy, including payment platforms, exchanges, cryptocurrency miners, asset managers, and blockchain technology.

Digital-asset exchanges are evolving

Looking beyond the regulatory backdrop, companies such as Coinbase (Nasdaq: COIN) continue to build and invest in new products and services. The very idea of an exchange is evolving, and Coinbase is at the heart of that transformation.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Trading digital assets remains the key driver of revenues, comprising 74% of sales last year. But revenue growth is also coming from other products and services, such as custody (storing digital assets) and asset management. These are not typical services for exchanges today, but they may be the type of value- added activities that set the standard for exchanges in the future.

In March 2023, Coinbase acquired One River Digital Asset Management to create further opportunities for institutions to participate in the digital economy. It also announced the launch of Base – a proprietary Ethereum Layer-2 blockchain – in February 2023. The company has been trumpeting new projects such as “Wallets as a Service”, which allows companies to make tailor-made digital wallets for their clients.

Mining goes green

Digital-asset miners play an integral role in building the digital economy. Iris Energy (Nasdaq: IREN) is a name worth noting. It owns and operates proprietary bitcoin-mining data centres that are solely powered by renewable energy.

Iris Energy prioritises sustainability to boost its long-term growth potential in “green” mining, an activity that not only plays a role in reducing the global energy market’s overall emissions, but also comes with the added benefit of lower costs and hence greater potential profitability, as it is less energy-intensive than traditional data mining.

Building a digital environment

While it may be less obvious how a company such as Block (Nasdaq: SQ), a financial-services and mobile- payments group, is involved in the digital economy, we would note that the embrace of blockchain and digital innovations by established and respected brands is an important sign of progress.

Last year, Block’s executives explained that the company’s future is to serve as an ecosystem of products and services. CFO Amrita Ahuja said that “calling Block a payments company is like calling Amazon a bookseller” and co-founder and CEO Jack Dorsey has pointed out that digital assets will play a crucial role in the firm’s future global growth.

Block is now exploring the development of proprietary digital asset-mining hardware, including so-called application specific integrated circuits (ASICs). The group appears to be making swift progress: the prototypes are already entering production.