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Global assets custodian State Street has decided to cut down its Decentralized Ledger Technologies (DLT) team and to focus on digital assets.
In what seems like an about-face, global banking custodian State Street has drastically cut down its Decentralized Ledger Technologies team, as sources indicate. Rather than focus on building a complete DLT ecosystem from scratch which hitherto before now had been the strategy that State Street pursued, the custodian has decided to focus on digital assets which include tokenized stocks and bonds as well cryptocurrencies. Such an approach is to be applied instead of a bottom-up strategy which promises to increase efficiency across the board.
Sources indicate that the custodian bank cut about 100 jobs due to the high costs of retention of DLT talents within its ranks. The number left is less than 100. That said, State Street’s human resource talent pool numbers around 39,407 employees globally. Currently, State Street is particularly interested in stablecoins, digital assets and the USC (United Settlement Coin project currently developed by the Fnality banking consortium).
Ralph Achkar who is the Managing Director of Digital Products at State Street while indicating that the custodian had let go of some of its human resources had also said that the focus on Distributed Ledger Technologies (DLTs) had not been shifted as well.
Before this, the custodian’s strategy had been to develop an all-in-one solution that covered all the business processes across the board with front-end- middleware and backend DLT solutions that worked seamlessly with each other. These new sets of solutions were to work on Hyperledger’s Fabric open-source permissioned blockchain software.
The new DLT system would have replaced thousands of lines of code with all sorts of Application Programming Interfaces linking with hundreds of databases that are connected together with higher human resource costs involved in the operations of such a system.
The custodian now wants to have a ”ledger-agnostic” approach that will enable it to depend more on outside providers for many of its DLT needs (it would most likely outsource these needs to them).
Ralph Achkar indicated more by saying:
“If something is Fabric-related we still have some Fabric engineers on board, I think the choice in approaching that space was, do we need to have all of these resources internally, or can we build partnerships and work with other providers in the market?”
This also puts the custodian in a dilemma that will require some sorts of extra genius to resolve without any headaches and system downtimes as well. Large financial institutions always find themselves in this sort of situation where legacy systems have been proving to be the faithful workhorses that have been doing the tasks mandated for them to do for decades.
With $30 trillion in assets under custody at the moment, a dramatic shift into DLTs is highly unlikely. However, this doesn’t mean that a gradual progression towards DLTs won’t occur as State Street hasn’t shut the door completely on DLTs, at least not yet. For now, though, a gradual migration with a replacement of the ecosystem using one component after another seems to be what they are doing as rocking the boat could also mean rocking the global asset market place as well.