The Sydney Opera House and the Sydney Harbour Bridge in Sydney, Australia.
Photographer: Lisa Maree Williams/BloombergAnna Irrera
Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, Anna Irrera checks in on the blockchain journey of Australia’s main securities exchange
TradeFi’s epic blockchain voyage
When blockchain made its entrance on Wall Street circa 2015, crypto’s underlying technology was touted by proponents as the cure for all market structure evils. In the not-too-distant future blockchain would make securities settlement near-instant, cheaper and almost infallible. Intermediaries and their pesky fees would become obsolete and investment banks were told they could save up to $12 billion a year in IT infrastructure costs.
Sold on the dream, banks and exchanges ramped up strategic investments in the space, signed up for a flurry of “proof of concepts,” and consortia.
Most enterprise blockchain projects were announced with great fanfare. But no project was as high profile or ambitious as plans by , Australia’s main securities exchange operator, to replace its core post trade processing system with distributed LEDGER technology. A massive coup for the nascent blockchain industry, but especially for the startup selected among 400 applicants to develop the technology: Digital Asset Holdings, the company led by industry veteran Blythe Masters.
With equity backing from ASX and a lineup of Wall Street royalty including Goldman Sachs, JPMorgan and CME Group, the startup seemed to have all the right ingredients to make a very bold dream come to reality.
“It’s the first real, large-scale commercial project for any distributed ledger business,” Masters, a former JPMorgan senior banker told Bloomberg in 2016. “This is the first instance of something that’s much more than hype.”
Six years (and a half), five project delays, three exchange CEOs and at several millions of dollars invested later, it is still unclear where that journey is going. And it’s starting to look more like an Odyssey. Or for market structure buffs, a very similar voyage to that of the London Stock Exchange’s ill-fated Taurus project
ASX said last week it does not expect the technology replacement changeover, already delayed twice this year, to go live “before late 2024.”
Still, even sans blockchain - or - Australian stocks continue to trade and settle, not instantly perhaps, but adequately enough for the market to go about its business.
So was blockchain on Wall Street – as its critics have claimed from the start – just a solution in search of a problem? And is this $250 million technology replacement still worth watching?
While ``most would say the odds are stacked against ASX, the next 18 months will be telling as to whether this becomes a positive case study or one like Taurus in its time, which is best forgotten,” said Hirander Misraof market infrastructure company GMEX Group.
Charting it out
Merge Mania
Ether has rallied from its June lows
Source: Bloomberg
Hearing them out
What we’re reading (and writing)
- Crypto Lender Tied to Chinese Rig Giant Throws Miners a Lifeline
- Ethereum Developers Set September Target for Software Update
- Tornado Cash Crackdown Shows Limits of Regulating Cryptocurrency Services (Wall Street Journal)
- Crypto Is Failing Where Digital Yuan May Succeed: Lionel Laurent (Bloomberg Opinion)
- Sam Bankman-Fried’s Crypto Firms Had Deep Ties to Voyager Digital (CNBC)
- BlackRock Offers Bitcoin Investing to Big Institutional Clients
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— With assistance by Vildana Hajric, Sidhartha Shukla, and Anne Cronin
