Digital Asset Group Eyes Crypto / DLT Bank Launch
Digital Asset Group formed a partnership with GMEX Group, which provides multi-asset exchange trading and post-trade business technology, as it aims to become the world’s first fully regulated business-to-business crypto and blockchain bank.
The group will provide traditional banking services and solutions for digital asset businesses, and facilitate an entry into the emerging blockchain economy for existing regulated financial services firms.
Stephanie Ramezan, partner at Digital Asset Group and co-founder of Quince Capital, told Markets Media: “We are trying to achieve something revolutionary in marrying traditional financial services with the digital world and launching the world’s first fully-regulated B2B crypto and blockchain bank. We were delighted to partner with GMEX since they have a similar mindset on the future of the digital world and they have the proven capability of building world-class technology and exchanges.”
Last month Digital Asset Group said it had formed a partnership with GMEX Group whose GMEX Fusion offering combines exchange technology with blockchain and is already live in multiple exchanges and post-trade venues. Digital Asset Group was co-founded by chief executive Sean Kiernan and Dmitry Kaminskiy, chief innovation officer. Kiernan was previously chief operating officer of Falcon Private Wealth while Kaminskiy is managing partner at Deep Knowledge Ventures, a Hong Kong-based investment fund. Digital Asset Group is separate from New York-headquartered Digital Asset, the distributed ledger software firm led by Blythe Masters, the former JP Morgan executive.
TheDigital Asset Group statement added: “The joint venture will be the first fully-integrated financial group servicing this emerging sector; bringing together the practices of regulated banking, finance and exchanges with emerging innovation and a digital world enabled by blockchain, distributed ledger and artificial intelligence technologies.”
Digital Asset Group said the collaboration will be structured the delivery of exchange initiatives with associated post-trade services such as a digital registry; a blockchain clearing house; decentralised depository and custody; digital and crypto banking; crypto fund management and emerging technology incubation.
Ramezan said the partnership is not limited to post-trade but will include over-the-counter trading of cryptoassets and front office software. She added: “We should have some of our various business lines up and running in the coming months and will have the technological capability for offering smart contracts in the upcoming future.”
She continued that the group may form other partnerships. “We have a lot of plans we are setting in motion, and we are as well entertaining approaches from other interesting companies who are looking to partner with us,” added Ramezan. “We will prioritise those initiatives which will best enable our mission in the development of the crypto/blockchain bank.”
Digital Asset Group held its first public event will take place in New York City last week discussing the credibility and accountability of blockchain technology and how it will be used within the firm.
Existing market participants in financial services have expressed views on blockchain and the range from the technology reshaping the industry to scepticism that it is just pure hype. The range of these opinions was on display an event last month hosted by Interxion, a provider of colocation data centre services; City Network, which provides cloud services meeting regulatory requirements; and LINX, the London Internet Exchange network.
Professor Michael Mainelli, executive chairman at think tank and venture firm Z/YEN Group, said DLT has huge potential but the cryptocurrency experiment has failed due to its large energy consumption.
“I am very excited at the potential for smart ledgers and mutually distributed executable code,” he added. “Multi-organisational databases can provide audit trails and documentation of identity.”
He continued that DLT in financial services will require central parties to control the database and verify new entries. In addition, firms should not focus on developing applications or proof of concepts to replace existing infrastructure that already works, such as the SWIFT payments system.
In contrast Lee McDonald, head of systems architecture at the London Metal Exchange, said at the event that the firm is looking at blockchain without any commitment.
“We have mature processes and question what blockchain will fix,” added McDonald. “We are waiting for the killer app.”
Ramezan said: “Given the team’s backgrounds and deep industry knowledge, we are confidant that despite the emerging nature of the digital asset industry, we have the foundation and capability to utilise and develop blockchain technology leading the way to greatly benefit the financial services sector and beyond.”
The regulated blockchain infrastructure platform announced the sixth broker-dealer to join.
The proof of concept uses smart contracts from Digital Asset and DLT from VMware.
The network is driving adoption of standardized post-trade swap data models and workflows.
The market maker will contribute real-time crypto market data before expanding into equities.
Pyth is built on a blockchain to handle receipt and distribution of fast-moving data.