The World Bank, in conjunction with the Commonwealth Bank of Australia, recently issued a public bond utilizing blockchain technology. The AU$100M bond issuance was sold without a hitch, which caused industry participants to cheer the platform a smashing success. In typical Aussie style, the platform is playfully named Bond-i which stands for Blockchain Operated New Debt Instrument and is also the name of Australia’s most famous beach.
For Crypto Law Insiders, large institutional adoption of blockchain technology should come as no surprise. We’ve already seen a number of other financial institutions embrace blockchain technology.
JP Morgan built Quorum, an Ethereum based protocol, which it hopes will revolutionize the financial industry. HSBC is already using blockchain to manage its trade finance transactions. Santander uses blockchain to provide forex services. Goldman Sachs is rumored to be launching its own USD stable coin, in addition to making sizeable investments into leading blockchain companies. And dozens of other major banks have begun building their own blockchain systems.
Nearly every financial institution is looking for ways to incorporate blockchain to make themselves more secure and efficient. The question now is not if blockchain will be adopted by financial institutions, but when and how.
World-leading security consultant Frank Abagnale, most famous as the trickster whose story inspired the film Catch Me If You Can, reinforced this idea at the Blockchain Nation Miami conference in April this year:
“I think you have to be pretty ignorant not to realize that blockchain is the way of the future. I think you’ll see banks—especially accounting practices and accounting firms—all move to blockchain…You cannot break the blockchain. You cannot hack into the blockchain. You can’t change anything on the blockchain.”
What does this mean for Crypto Law Insiders?
As Insiders, we need to be careful to distinguish between the adoption of blockchain and the acceptance of cryptocurrencies.
There is no doubt that blockchain technology will be increasingly ubiquitous across all industries, including in financial services. However, we should not assume that this adoption will lead to greater acceptance of cryptocurrencies and crypto-related businesses. It won’t.
As cryptocurrencies pose a unique threat to regulators and the financial system as a whole, there is greater resistance to their official acceptance. It will take time for regulatory certainty to be established around cryptocurrencies, which is a prerequisite for them to be embraced by mainstream institutions.
Given increasing adoption of blockchain, entrepreneurs and investors in the crypto ecosystem should continue to be very bullish on blockchain technology that is coin agnostic.
At Crypto Law Insider, we believe that 2019 will be the year of the security token. Soon, we will see an increasing number of securities tokenized and trading on the blockchain. The issuers of these security tokens will be real businesses with real assets. These security tokens will have value.
The same technology used to store, exchange and transfer today’s cryptocurrencies will be used to store, exchange and transfer security tokens. Thus, while the fate of any individual cryptocurrency is still unclear, there is no doubt that the infrastructure needed to use, store, exchange and transfer digital currencies will be widespread. Something to keep in mind when making your next crypto-related investment decision.