Bitcoin Evolution promote blockchain applications

Payment service provider Swift and central securities depositories to promote blockchain applications
February 12, 2018 | Gregor Hallmann
Payment service provider Swift and central securities depositories to promote blockchain applications

The payment service provider Swift and seven central securities depositories intend Bitcoin Evolution to jointly advance distributed ledger technologies (DLT) for applications in securities markets. The connection with existing standards and the acceptance of market participants and regulators are central to this project.

Bitcoin Evolution significant costs and risks

A recently signed Memorandum of Understanding states that the CSDs and Swift will demonstrate how DLT can be used in post-trade applications such as corporate actions, electronic voting and custody voting. At present, securities settlement – especially in areas So it was all about the Bitcoin Evolution review that require contact with many participants – is associated with extremely cumbersome manual processes that could entail significant costs and risks. The central securities depositories involved in the DLT project are NASDAQ Market Technology, Abu Dhabi Securities Exchange, Caja de Valores from Argentina, the Chilean Depósito Central de Valores, the National Settlement Depository from Russia, the Swiss Six Securities Services and Strate from South Africa. According to Swift, the accession of further central securities depositories is expected in the coming weeks.

Focus on standards
Together, they will explore new product types for the post-trade sector and examine how they can be supported by existing standards such as ISO 20022. “To ensure interoperability and smooth migration, it is critical Bitcoin Evolution that new technologies support existing standards such as ISO 20022,” said Stephen Lindsay, Head of Standards at Swift, adding:

“The promises of the technology are great on paper, but currently it lacks a key component in standardization. This project will show that there is a clear value in reusing established definitions and facilitating interoperability between DLT applications”.

The initiative also wants to establish new standards for the use of DLT between custodians and the financial industry and adapt existing standards. A further goal is to promote the adoption of these standards by other market participants and regulators. It should help that the initiative was welcomed by the International Association of Securities Service Providers (ISSA) and included in its DLT working group.

Swift embraces the blockchain
Swift launched a feasibility study in January last year to assess the suitability of blockchain technology for improving real-time reconciliation of nostro accounts. In the current correspondent banking model, banks have to monitor the funds onlinebetrug english in their foreign accounts through daily closings, which results in significant costs. But if banks could manage the liquidity of their nostro accounts in real time, they could determine exactly how much money is needed in each individual account at any given time. “And that ultimately allows them to free up significant resources for other investments,” said Damien Vanderveken, Swift’s head of research and development.

As reported by BTC-Echo, 22 globally active banks joined the feasibility study last summer, which was originally initiated with six founding banks. The field of participants now reads like the Who’s Who of the international financial world, from ABN AMRO and BNP Paribas to Commerzbank and Deutsche Bank, JPMorgan Chase, Santander, Société Générale, Standard Chartered, Sumitomo Mitsui Banking Corporation, UniCredit and Wells Fargo. Swift’s Proof of Concept uses Hyperledger* Fabric v1.0 technology in conjunction with Swift’s core functions to ensure that all information related to Nostro/Vostro accounts remains confidential and can only be viewed by the account holder and his correspondent bank partner.