1. RegTech (cont.)
It feels odd to say that regtech is a la mode, but much of the talk at our recent European Members Conference revolved around the (mostly positive) involvement of regulators in distributed ledger innovation. A recent speech by Minouche Shafik, Deputy Governor at Bank of England, highlights the potential role for distributed ledger tech within the evolution of the RTGS payments network:
The emergence of various forms of Distributed Ledger Technology (DLT) poses much more profound challenges because it enables verification of payments to be decentralised, removing the need for a trusted third party. It may reshape the mechanisms for making secured payments: instead of settlement occurring across the books of a single central authority (such as a central bank, clearing house or custodian), strong cryptographic and verification algorithms allow everyone in a DLT network to have a copy of the ledger, and give distributed authority for managing and updating that ledger to a much wider group of agents.
2. Blockchain Longreads
DTCC released a much-discussed paper on the opportunities, risk and hype around distributed ledgers. The report suggests leaving alone the "not-broken" segments of the market to instead focus on "white space" application areas such as master data management. The report is worth a read in full. I also very much appreciate their endorsement of the R3 model:
This is the opportunity to create an industry-wide initiative to develop the right architecture, prioritize the infrastructure building blocks and support focused and collaborative experiments to help the technology mature.
CoinDesk released their annual State of Bitcoin (now with Blockchain!) report. Among the many icons and charts, these two are the most sobering:
Deloitte adds to the consultant thinkpiece library with a longish report on blockchain opportunities. Much of it treads the same ground of other reports, but its addendum on a KYC use case for banking is interesting, both as a review of the cadre of startups now attacking the space and for the stat that only 17% of the SWIFT banking universe have signed up to their KYC shared service. In the end, identity may turn out to be the killer app of blockchain. Many hard problems in distributed identity remain (the DTCC report called out a few) yet they are problems worth tackling.
Finally, Forbes' Laura Shin files a thorough overview of companies (including R3) in the bitcoin+blockchain space, across five areas: Bitcoin, Fintech, Enterprise, Consortia, Infrastructure. Interesting perspective, and due to the Barry Silbert "Homer-mobile" shout out for R3, it allows me the chance for yet another Simpsons pic. Have a great w/e.