Greg Medcraft, a known supporter of the distributed ledger technology, urged global regulators to consider the challages of the blockchain to reach its widespread adoption.

The head of the Australian Securities & Investments Commission (ASIC) incentivized regulators over the globe to embrace the blockchain innovation and think about the challenges of the distributed ledger during an industry meeting in Madrid. Greg Medcraft is convinced that the blockchain technology has a huge potential and could fundamentally change the future of the financial industry.

“Don’t be afraid of innovation. Engage with it and see how you can help business harvest it,” he said.

In an interview to The Australian, Greg Medcraft noted that the commercial use of blockchain could help industry players to save billions of dollars. Besides, he pointed out that the technology behind bitcoin could enhance liquidity in some financial tools and simplify the process of recording transactions.

“The idea is that if you have a unique data set, or block, which can be transferred digitally, the same record can be trusted as it moves from point to point. If there is no need to reconcile transactions you save huge amounts in transaction costs,” he said.

According to Medcraft, Australia has an opportunity to become the leader in exploring the applications of the distributed ledger.

During an interview, Medcraft also mentioned the Australian Securities Exchange (ASX), which has recently uncovered its plans to incorporate the distributed ledger technology in the near future.

“Having something like the ASX’s initiative and having a regulator that actually embraces it and finds a way to make it happen without compromising our fundamental objective of making sure people can have trust and confidence in the system,” he stated.

The ASX will become the first exchange to integrate the blockchain technology for the settlement of securities trading. In January, it partnered with Digital Asset Holdings to develop solutions based on the distributed ledger technology. The ASX currently owns a 5% share in the startup.

Although Medcraft is enthusiastic about the distribute ledger technology, he noted that a private blockchain would be suitable for exchanges and financial regulators. “With private blockchain, the people involved actually know one another. The difference is, if something goes wrong, I can come back to you.”

Medcraft also views the potential of the blockchain technology to transform the settlement of trades at stock exchanges in underdeveloped countries.

Some experts, he noted, believe that the broad application of the technology in securities trading will take between five and ten years. Others, meantime, believe it will happen in the next couple of months.

The interest in the blockchain technology increased significantly over the last year, according to a report prepared by CB Insights and KPMG. The total VC investment reached $460 million in 2015, rising from $298 million in 2014.

However, the technology is still developing and its widespread implementation could lead to negative financial consequences. Investors, the report underlines, need to have a clear understanding of all the possible challenges and costs of blockchain integration.

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