Deutsche Bank analyst: Blockchain technology could have been used to prevent Soros’ investment decisions from being leaked

Baozou Commentary : A lot of information in the investment market can influence investors' behavior and investment results, especially the security of some sensitive information is particularly important. Last month, the Dutch Financial Supervisory Authority AFM accidentally leaked important investment decisions of investment giants such as Soros. These are all investment information with great value. People who know the information can use it as an investment guide. However, if blockchain ledger technology is used to record financial transactions, such serious information security issues will not occur.

Translation: Annie_Xu

Deutsche Bank analysts believe that regulators are not the only possible beneficiaries of moving global financial transactions to a shared, immutable ledger.

Investors will also be safer.

Last month, for example, the Dutch financial regulator AFM accidentally published a summary of short-selling transactions over the past four years. In addition to valuable data on well-known investors betting against companies, it also included some decisions made by legendary investor George Soros.

Analyst Jamal Simpson said the leak would not have been possible if transaction data had been stored on a blockchain.

“This is a case where distributed ledger technology, or blockchain technology, could have prevented this from happening in the first place.”

The leaked information on hundreds of short-selling transactions was supposed to be shown only to regulators as a brief report, but was mistakenly made public, allowing people to peek into the valuable investment decisions of some investors, including Soros.

Although regulators quickly deleted the data, the potential damage had already been done. The leaked airdrop transactions included bets against multiple Dutch banks and positions in the Medallion Fund, a fund issued only to internal employees by US investment management company Renaissance Technologies.

To understand the potential value of Soros' investment decisions, Forbes estimates that American investors currently have a net worth of $25.2 billion.

“I believe if someone gets wind of this now, they can get a better idea of ​​who owns what, who owns which stocks, and can adjust their trading strategies accordingly,” Simpson said.

The potential of moving financial transactions to a shared distributed ledger has been frequently discussed by members of the industry, who have advocated for the creation of so-called “regulatory nodes” that would give government agencies access to data in real time.

But Simpson’s comments also reveal potential benefits for investors. Putting information on a blockchain can minimize the chances of leaks by protecting data in transit.

Institutions exploring the technology are generally concerned about the security of moving financial transactions to a shared ledger. But Simpson said the Soros decision leak revealed the risks inherent in the current system.

Increased control

Simpson also pointed out that such disclosures required by law could also be automated. For example, Soros himself shorted Deutsche Bank last June over the impact of Britain's exit from the European Union.

In this case, Soros’s investment exceeded the minimum amount that had to be disclosed, another example of how investor protection and disclosure requirements can be encrypted and written into a blockchain-based, self-executing contract.

As for skeptics of blockchain technology’s potential for financial transactions, Simpson said:

“Even if you’re not using blockchain technology, there are ways to protect information, but I would say that if you’re going to use blockchain technology, then it’s absolutely possible and the technical feasibility of making it more secure is huge.”