International consortium analyzes the impact of crypto assets on the current services of the financial system

DCV HAS HAD AN ACTIVE PARTICIPATION IN THE INTERNATIONAL CONSORTIUM FORMED BY OTHER SECURITIES DEPOSITORIES AND SUPPLIERS OF THE INDUSTRY, WHOSE JOINT WORK SEEKS TO FIND IMPLEMENTATION ALTERNATIVES FOR DLT BLOCKCHAIN -TECHNOLOGY – (DISTRIBUTED LEDGER TECHNOLOGY) TO IMPROVE AND OPTIMIZE PROCESSES IN THE FINANCIAL INDUSTRY.

Las primeras publicaciones del grupo de trabajo, abordordaron la votación de juntas de accionistas (see here to review this document), and then went to analyze the impact and changes that will be generated by the so-called “crypto assets” (which are based on blockchain technology) in the current services provided by the financial system.

Claudio Calderón, Head of R&D Projects, who has led this work within DCV, comments that at some point we will reach as an industry the creation of financial instruments in cryptographic environments, so it is important to study this new technology now. Therefore, the initial work focused on identifying the roles required for these new crypto assets.

The first phase of this work was published in October 2018 (see here to review this document). Today the working group of distributed registration technology (DLT), under the guidance of the International Securities Services Association- ISSA, led by Glen Fernández (Euroclear) and Urs Sauer (SIX), has created a new document to guide best practices and provide recommendations regarding the issuance, settlement, custody and service associated with corporate events, such as the payment of dividends or debt instruments maturities. While focusing on interoperability, the document states that the securities industry can fully benefit from DLT-based solutions. Each dedicated chapter addresses the fundamentals of the opportunity of using it, the challenges in delivering it, as well as the possible solutions to the problems in an easily accessible way for interested parties.

“Among the principal findings we found that, in the settlement stage, the DVP (delivery-against-payment) mechanisms are feasible in a DLT network and that standards are required for a correct interoperability between the different systems, both between a DLT network with current registration systems, as with other DLT networks,” added Claudio Calderón. The executive points out that this work was fundamental for the project that DCV is currently carrying out with the Central Bank of Chile as they are applying this new technology to what is being issued by the latter institution. “It allowed us to know the experience of other institutions and see trends,” he concluded.

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