Blythe Masters: Blockchain at 'tipping point' for finance

Blythe Masters, chief executive officer of Digital Assets Holdings LLC, speaks during a Bloomberg Television interview at the Singapore Fintech Conference in Singapore, on Wednesday, Nov. 16, 2016

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Blythe Masters

Speaking at the Disruptive Technologies Forum in London on November 29 – an event co-hosted by the Depository Trust & Clearing Corporation and The Centre for the Study of Financial Innovation – Masters said there had been a “sea change between today and a few months ago” in blockchain’s move to becoming a mainstream technology.

“When I look back at the last eight months to a year I can point to several things that I believe constitute signs of a tipping point, where the substance of what is going on has shifted from speculative, aspirational, or provocative in some cases, to actually real”, she said.

Masters is chief executive of Digital Asset Holdings, a blockchain start-up backed by the DTCC and other financial institutions. It was selected by the Australian exchange ASX in January 2016 to develop a distributed ledger-based technology as part of an upgrade of the Sydney-based group’s main trading and post-trade platforms.

Masters pointed to the ASX deal as evidence of the “beginnings of commercially-oriented contracts” for blockchain technology.

She said: “We’ve moved through the evangelical, marketing phase and are now under contract to deliver systems that actually have to do a real job in the real word, not just for commercial entities but for highly regulated, systemically consequential organisations that deal with trillions of dollars of notional every day.”

“That changes everything”, she said.

Blockchain, which first emerged as the technology underpinning bitcoin, is a distributed ledger of transactions and asset ownership that is maintained by a network of computers over the Internet. Financial institutions are looking to adapt the technology, with many believing it could significantly reduce costs and speed up post-trade processes.

Masters pointed towards several other developments over the past year as a sign of the technology’s growing maturity, including the “widespread proliferation of consortia that are doing more than just talk”.

She also said the significant amounts of investment into distributed ledger technology over the past year has “unlike prior years, predominantly gone into areas focused on blockchain rather than bitcoin”.

She said “almost all” of that investment has come “not from VCs but mainly from strategic investors whose clear intent is to use the technology as opposed to make a quick buck from it”.

Regulators are also getting involved in a “new and much more intense way, both with a supervisory hat on but with a promotional and innovation hat”, Masters said.

She added: “If we were to ask ourselves what would we need to be seeing today if it were to be the case that this technology were to become mainstream in five to 10 years, it would be all of the above.”

DAH has partnered with the DTCC, one of the world’s largest post-trade providers, to develop and test a distributed ledger-based system to manage the clearing and settlement of repos.

Mike Bodson, DTCC’s president and CEO, said in the Forum’s opening address that “people are much more focused on the ways blockchain will be truly successful now” but added there were “limitations to the technology that must be overcome before it can be integrated into existing legacy systems”.

He added: “While blockchain holds enormous potential – and at DTCC we are exploring many applications of it – the industry needs to identify the areas where it would provide the greatest value in terms of risk and cost reduction.”

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