10.19.2015
By Rob Daly Editor-at-Large

Blockchain Coming to Wall Street

10.19.2015 By Rob Daly Editor-at-Large

Large financial institutions are rarely first movers on any new technology, and predictably, institutional interest in bitcoin remains somewhat tepid.

But that may be starting to change. Some industry observers believe Wall Street will meaningfully expand its deployment of the cryptocurrency’s enabling blockchain distributed database by early next year.

“One of the major banks will announce a broader usage of distributed-ledger technology, beyond what we have been seeing so far, sometime in the next six months,” said Ron Quaranta, founder and chairman of the Wall Street Blockchain Alliance, a blockchain and digital currencies trade advocacy group. “We’re beginning to move beyond white-boarding and we’re starting to see the first implementation of the basis of blockchain capability in the financial-services world.”

Last month, 23 of the largest global banks joined technology vendor R3’s distributed-ledger initiative, which seeks to establish standards and protocols for distributed database technology.

Ron Quaranta, Wall Street Blockchain Alliance

Ron Quaranta,
Wall Street Blockchain Alliance

This industry-wide initiative is on top of all of the internal research and development being done by individual financial firms, according to Quaranta.

Just last week, t0 (pronounced T-zero), a subsidiary of online retailer Overstock.com, completed a beta test of its blockchain-based platform that records traders’ compliance with Regulation SHO requirements before they can engage in a short sale, according to company officials.

“The blockchain is the most important financial development of our lifetime,” said t0 CEO Patrick Byrne. “While others theorize about the innovations the new technology can usher in, t0 is taking action and providing the concept daily, including using it to crack open the notorious inaccessible black box of securities lending.”

However, Quaranta suggests that the industry likely will adopt blockchain-based technology to support distributed ledgers before rolling it out for back-office applications.

It is not a matter of deploying a new technology, but deploying a new technology and updating the processes that the technology supports. “We’re looking at a fundamental re-invention of how the back office operates,” Quaranta said. “The industry is still trying to get its hands around how that would work.”

Blockchain’s distributed-database technology has the potential of affecting how financial institutions address their anti-money laundering and know-your-customer (KYC) requirements as well as their basic accounting at tax strategies, Quaranta noted. “Blockchain conversation has gone from ‘It’s a real neat technology,’ to ‘It’s a real neat technology, but how will it impact our future?’.”

Featured image via Natalia Merzlyakova/Dollar Photo Club

Related articles

  1. Deutsche Borse-LSE Merger in Focus
    From The Markets

    SETL Acquired by Colendi

    The SETL/Colendi enterprise is preparing a new public blockchain infrastructure.

  2. AB's asset services activities will be adapted to the blockchain ecosystem.

  3. Elliptic can support more than 500 crypto assets.

  4. Clearstream Focuses on Collateral Mobilisation

    CFTC staff are holding a public hearing on 25 May on FTX's proposal to change margining.

  5. State Street, Paxos and Credit Suisse completed a pilot of same day settlement.

Wordpress Management by Creating Digital.