The chairman of the Australian Securities & Investments Commission (ASIC) has encouraged regulators around the world to embrace blockchain innovation, the technology that underpins bitcoin.
ASIC chairman Greg Medcraft has spoken about the potential and promise that blockchain technology holds, urging regulators around the world to “start thinking about” blockchain innovation, during a recent industry meeting at Madrid.
Besides his role as the ASIC chairman, Medcraft is also the chairman of the International Organization of Securities Commissions (IOSCO). Suffice to say, the endorsement for blockchain is coming from a lofty position.
The chairman was speaking to The Australian in an interview, wherein he claimed that the industry could save billions “if they can make it [blockchain-tech] work”.
He further called upon market regulators globally to “start thinking about” the challenges of distributed ledgers in order to scale the technology for real-world practical use.
At the meeting in Spain, Medcraft revealed that he had told other attending market regulators to embrace innovation such as the blockchain.
[D]on’t be afraid of innovation. Engage with it and see how you can help business harvest it.
Australian Blockchain Endeavors
The Australian Securities Exchange (ASX), after a year of hinting toward integrating blockchain technology for post-trade solutions in 2015, revealed its plan to do just that this year. The announcement came along with its investment in New York-based blockchain startup Digital Asset Holdings, where the ASX now owns a 5 percent stake.
Medcraft claimed Australia had a “great opportunity to lead” the path in blockchain integration toward practical solutions and scaling the technology toward the promise land. He has a good example to back up such a claim, with the ASX becoming the first prominent global exchange to integrate distributed ledger technology into its securities' trading and settlement systems.
In making note of the ASX’s foray to embrace blockchain or distributed ledger technology, Medcraft told the publication:
[H]aving 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.
Private over Public Blockchains
Despite his enthusiasm for distributed ledger technology, the chairman points to private blockchains over public ledgers –like the bitcoin blockchain – as innovation suitable for financial regulators and exchanges.
Noting that a public blockchain like the bitcoin system where, according to him, “everyone was anonymous”, he added that a private blockchain would suit all financial parties just fine.
With private blockchain, the people involved actually know one another. The difference is, if something goes wrong, I can come back to you.
In order to look into the hurdles and questions surrounding blockchain technology, the IOSCO has set up a taskforce looking into the innovation which he described as “the next stage of fintech.”
Medcraft revealed that the industry sees experts citing practical broad usability of blockchains will take five to ten years in industry sectors such as share trading and settlements. Some, he stated, believe it will occur within the next two to three years.
It might happen even sooner. Besides the ASX actively trialing the technology with its post-trade systems, other financial institutions around the world have already claimed successes in blockchain-based trials. Mizhou Bank in Japan announced its recent trial which saw same-day settlements of cross-border securities transactions. The bank, along with its technology partners revealed practical applications of distributed ledger technology will begin as early as this month.
Another example of a successful blockchain test saw London-based Standard Chartered and Singapore-based DBS partner together for a distributed ledger test for trade finance in Singapore. The two banks –following the successful test of the technology between each other – will invite other companies and collaborators to develop the proof-of-concept system this year.
Medcraft also sees blockchain’s potential use for stock exchange settlements in less developed countries around the world. Blockchain-based settlement systems can help them scale beyond current systems which are predominantly undeveloped.
Places like Kenya, which are very progressive, are interested as it gives them the potential to leapfrog the technology [legacy systems].