As said by Bloomberg Business, a well-known Blythe Masters, ex-JP Morgan managing director, is currently promoting blockchain. She plans to offer banks and other financial players two options: creating an off-the-shelf private blockchain product and developing ways to connect its customers to the existing bitcoin system.
At the moment, Masters is the CEO of Digital Asset Holdings, a New York tech startup. She said the company is designing software that will enable banks, investors, and other market players to use blockchain technology to change the way they trade loans, bonds, and other assets.
“You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s. It’s analogous to e-mail for money,” explained Masters at a Sandler O’Neill & Partners investor conference.
Masters is not the only voice proclaiming the coming of the blockchain.
For instance, the Bank of England has recently stated that central banks consider implementing “hybrid systems” involving blockchain.
“Creating such a system would entail creating a protocol for value transfer over the internet, akin to what Berners-Lee (1989) did for information. Firms offering digital currency services, such as wallets or currency exchange, would operate on top of the platform, raising the question of how they should be regulated. As they would not be offering to hold funds on their own account, the prudential regulatory issues would probably be different from the conventional focus on capital and liquidity requirements at existing banks,” the bank stated.
Besides, this July BNP Paribas, France’s biggest bank and financial services company headquartered in Paris, has been doing “beta testing” involving blockchain with a view to making an announcement about that in the near future.
“We are looking at blockchain technology and how it can be applied to post trade processes to make things faster and potentially cheaper but it’s all very much projects and it’s all in testing. It’s nothing live,” said a spokeswoman for BNP Paribas.
On 2nd July, France’s third largest bank Société Générale, posted a job listing for an “IT developer on bitcoin, blockchains and cryptocurrencies”. According to the post, the 12-month contract would entail research and development involving digital currencies and the blockchain. Though no specifics were outlined, the post suggests that the bank is looking to develop in-house software, citing “prototype programming”.
“The type of position that is offered is at the forefront of SocGen’s attempt at anticipating sweeping changes in the banking sector caused by FinTech and adapt to it,” the post wrote.
However, at the moment everyone is trying to figure out whether Masters’s company and other startups are really going to change the systems that process trillions of dollars in securities trades.
Blythe Masters believes that the blockchain can be used to streamline all manner of financial transactions.
“You have front-end systems trading at warp speed, and nanoseconds of competitive advantage are being extracted, and yet the back end of Wall Street hasn’t been fundamentally overhauled in decades. Firms are dealing with greater requirements for reporting, transparency, and dissemination of data. Costs have gone up and revenues have gone down. This technology really gets to the core of all those issues,” Masters told BloombergBusiness in an interview at her offices in Manhattan’s Flatiron District.
It should not go unmentioned that in April, UBS installed a half dozen developers in London’s Level39 accelerator to download blockchain source code from the Internet and explore how it might revolutionize payments, cybersecurity, and other banking needs.
Barclays, Goldman Sachs, the New York Stock Exchange, and Santander are backing digital currency ventures. Besides, Marc Andreessen, Jim Breyer, Reid Hoffman are all over this space.
In June, Nasdaq collaborated with Chain, a San Francisco company, and launched a project to use the blockchain to issue and transfer the equity shares of closely held companies on the exchange’s private marketplace.
“The blockchain is going to bring levels of efficiency to the financial markets that we’ve never seen before. In time, it could be as impactful on the back office as electronic trading was on open outcry,” said Nasdaq CEO Bob Greifeld.
Oliver Bussmann, the chief information officer at UBS, considers that the blockchain has the potential to change the very structure of the financial services industry.
“If you brought up bitcoin with bankers 12 months ago, you’d lose their attention immediately. Now, everyone sees this as a critical topic. I know of more than 100 firms that are trying to make the blockchain more scalable, more secure, to make the one that everybody will use. There’s a race on out there,” he said.
However, changing the market’s infrastructure and persuading financial players to place their trust in blockchain is a big task.