In a recent speech at Harvard Law School’s Fidelity Guest Lecture Series, US Securities & Exchange Commission (SEC) Commissioner Kara M. Stein stated that one can imagine a world in which securities lending, repo, and margin financing are all traceable through blockchain’s transparent and open approach to tracking transactions and that this could revolutionize regulators’ approach to monitoring systemic risk.
Though Stein backs down and clearly says she was not advocating the adoption or effectiveness of blockchain technology, she said that the disruptive technology has many potential benefits to the financial industry.
I wanted to touch quickly on blockchain. Blockchain technology has been getting a lot of attention lately. It is the technology behind bitcoin, the digital currency which many of you have undoubtedly heard of. Blockchain is a database network where messages create a digital record of a transaction that cannot be changed once approved in the “chain.” Anyone on the computer network can see the details of the transactions on a public ledger. Separate and apart from its use with bitcoin, some have been recently advocating that blockchain technology could revolutionize other areas of finance. It could be used to overhaul areas like securities clearing and settlements, payment processing by banks, and cumbersome loan transactions. It has the power potentially to increase quality and facilitate trust.
While I am not advocating for the adoption or effectiveness of blockchain technology, it appears to offer potential. One can imagine a world in which securities lending, repo, and margin financing are all traceable through blockchain’s transparent and open approach to tracking transactions. That could revolutionize regulators’ approach to monitoring systemic risk in these areas, including the oversight of collateral reuse, to name just one potential use.
However, creative uses of blockchain are still in their infancy, and a lot of questions will need to be answered, including on issues related to cybersecurity. I do think regulators, academics, and market participants in the U.S. need to be constantly evaluating potentially disruptive ideas like blockchain. Can it be used to enhance the quality of our markets and investor protection? Or, is there a way it could be used to monopolize markets or undermine competition? How should this technology be best deployed? Should it be run via a public-private partnership, somewhat like the Internet? If the market begins to move toward blockchain technology, regulators need to be in a position to lead, harnessing its benefits and responding quickly to potential weaknesses.
- Enjin Platform Enables Game Developers to Integrate Blockchain Assets Without Blockchain Coding Experience - February 18, 2020
- Blockchain Project Cashaa Protecting Crypto Companies to Survive Fifth Money Laundering Directive and New FCA Rules in 2020 - February 8, 2020
- US SEC Boss Hester Peirce Suggests Three Year “Safe Harbour Period” For Token Sales - February 6, 2020
- China’s Hyperchain Plans to Take on Coronavirus With Blockchain-Fueled Donation Platform - February 6, 2020
- Blockstack Proposes Using Bitcoin, Novel ‘Proof of Transfer’ To Accelerate A Truly User-Owned Web 3.0 - February 6, 2020
- Hack Blockchain To The MAX! €15.000 Prizepool at MAXathon in Berlin April 18-19, 2020 - February 6, 2020
- Chiliz And Enjin To Launch Blockchain Collectibles Using NFTs For The Likes of Juventus, Paris Saint-Germain, Atlético de Madrid and West Ham - February 6, 2020
- MIT Researchers Claim to Boost Bitcoin and Cryptocurrency Blockchain Transactions By 4x with New ‘Spider’ Routing Scheme - February 4, 2020
- Canada’s Blockchain Intelligence Group Signs USD$540,000 Contract with United States Feds - February 4, 2020
- The United States Marshals Services to Auction 4,040.54069820 Bitcoin – USD$37 Million - February 4, 2020
- OpenLegacy Project Gets $20m Strategic Investment from Japan’s SBI Holdings – Focus on Blockchain - February 4, 2020
- Fastest Growing and Highest Revenue Mobile Messenger App in the World, Japan’s LINE to Launch LINK Cryptocurrency - February 3, 2020
- Insolar to Launch MainNet on February 3, 2020 – Debuts Insolar’s New XNS Token - February 3, 2020
- Blockchain-Based Social Media App Vid with VI Tokens – To Launch April 1, 2020 – After VC $10 million USD Investment in 2019 - February 3, 2020
- UK FCA Licenses BCB Group as First Crypto Company to be Regulated as Authorised Payment Institution - January 31, 2020
- Virgil Griffith Pleads Innocent in Blockchain North Korea Event Case – Faces Up To 20 Years in Prison if Convicted - January 31, 2020
- University College London Centre for Blockchain Technologies Releases New Report on Supply Chains - January 31, 2020
- World’s Leading Research and Advisory Company Gartner Says Blockchain Smart Contracts Can Increase Corporate Overall Data Quality by 50 Percent - January 31, 2020
- Dubai Wants to Clone Crypto Valley in the Desert - January 29, 2020
- The National Bank of Cambodia (NBC) to Launch Blockchain-Based, Central Bank Digital Currency (CBDC) - January 29, 2020