Silent Wall Street Giant Wades Into Blockchain Tech

Silent Wall Street Giant Wades Into Blockchain Tech

Ethereum ETH/USD rode the momentum of the upcoming Merge—which has been confirmed to begin September 6—to battle its way back to the 1,700 level this week.

Global asset management giant Invesco has its eyes on web3 with the launch of Invesco Metaverse Fund this week. The $30 million fund will be actively managed and invest in 7 key areas, including next-gen operating and computer systems, hardware and devices, and networks.

Meanwhile, Sharktank’s Mark Cuban is taking swipes at Gary Gensler and the SEC. Cuban claims the agency has made it “near impossible” for the industry to get any sort of clarity—he’s not wrong!

And finally, audited financials revealed revenue growth of more than 1,000% for FTX FTT/USD in 2021 after increasing sales from $89 million to $1.02 billion! More on Sam Bankman-Fried (SBF) and FTX below.

  1. Silent Wall Street giant wades into blockchain tech

  2. Distributed ledger technology is having its moment

  3. There are always strings attached

1. Silent Wall Street giant wades into blockchain tech

One of crypto’s biggest milestones is quietly being achieved by one of Wall Street’s silent giants.

The Depository Trust & Clearing Corporation (DTCC)—which processes virtually every trade you and I make—is live testing a private blockchain, Project Ion, on which it is processing over 100,000 equity transactions a day.

Why is this a big deal?

Trade settlements currently take ~2 days, during which DTCC requires collateral to be put up in the event of an “oh shit” scenario like the one we saw play out with Robinhood HOOD and GameStop GME.

In this example, Robinhood was unable to put up the collateral which forced it to halt trading and the rest is meme-stock history.

With Project Ion, such debacles would be avoided as settlements would occur on the same day they are executed, like crypto.

The former president of the New York Stock Exchange was quoted this week saying, “blockchain technology is going to rewire all financial services”.

This is just one of many dominos.

2. Distributed ledger technology is having its moment

Continuing this theme: DTCC is not the only one working to integrate blockchain technology into its business—not by a long shot.

Despite the challenges posed by regulatory uncertainty surrounding risk management, custody, and collateral rules that are still under development, the fact is that none of Wall Street’s giants want to risk being left behind.

Not to be outdone by JPMorgan’s blockchain-based platform, Onyx, Goldman Sachs is building its own distributed ledger technology network it says will lower the risk associated with trading partners and make shares and other assets easier to track.

The bank expects to utilize the platform to serve itself and its clients, with the possibility of supporting other banks (as Onyx does).

Like the DTCC move, this has major potential to cut down settlement times which both reduce counterparty risks and frees up capital that would otherwise be locked up.

3. There are always strings attached

Back at the beginning of July, FTX tossed BlockFi a $400 million lifeline which included an option to acquire…with strings attached.

According to CoinDesk, the SBF-led crypto giant could end up purchasing the struggling lender for as little as $15 million…or as much as $240 million.

It all comes down to a few specific performance targets:

  • An additional $25 million if BlockFi wins S-1 registration from the SEC by December 31st

  • Another $100 million if BlockFi reaches $10 billion in client assets by October 2023 (when FTX can exercise)

  • An amount equal to 25% of BlockFi’s annual operating income

Regarding the second point: BlockFi held roughly $4.4 billion in assets at the end of Q2.

Regarding the third: the company lost money in 2020 and 2021 and is projecting a loss for 2022.

All signs point to a fantastic 2023 for SBF!

 

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Posted In: Blockchain TechcontributorsCryptoDTCCCryptocurrencyMarketsTech