PwC launches Vulcan digital asset service to help banks reposition Bitcoin

Cryptocurrencies sparked the discussion about blockchain, but it’s an open secret that cryptocurrencies have taken a backseat to blockchain as interest in distributed ledgers has grown.

Vulcan Digital Asset Services is a platform created by Bloq, Libra, Netki and PricewaterhouseCoopers (PwC) to enable PwC clients to launch digital assets that will be interoperable and tradeable with Bitcoin and many other altcoins.

In an interview, Vulcan director and PwC Australia blockchain lead Robert Allen explained that the project aims to make Bitcoin more accessible to large institutions.

Allen told CoinDesk:

“We started with digital currency and said, ‘How do we make Bitcoin work with banks?’ We will soon see that cryptocurrencies like Bitcoin actually have broad applications in identity, compliance and regulatory reporting.”

Allen explained that retailers could use Vulcan to issue their own rewards points, which could be traded for bitcoin or other digital assets.

The PwC platform would then be responsible for providing the supporting infrastructure, enabling clients to create wallets, process payments and perhaps soon launch merchant services.

In this regard, Allen said PwC’s efforts are designed to allow clients to meet compliance needs while still leveraging the open-source blockchain ecosystem, but in a way that only authorized participants can operate the digital currency network.

Jeremy Drane, former head of financial technology at PwC who currently works at Libra, called Vulcan a "huge step" toward uniting the now-fragmented blockchain and digital currency ecosystem.

He told CoinDesk:

“This technology stack eliminates the argument that banks cannot allow their customers to buy, sell and use Bitcoin and other cryptocurrencies because of technical limitations and the impact on existing regulatory regimes.”

Through PwC Australia, Allen said Vulcan would not only be a feedback product for the company's entire 'global network', but could become a subscription service in the future.

Decrypting Vulcan

So what exactly are digital asset services?

According to Bloq co-founder Matt Roszak, this new product is completely different from what is offered by so-called ‘blockchain startups’ because Vulcan users can create a new blockchain and then connect it to another public blockchain (such as Bitcoin).

However, Roszak said Vulcan is better described as an ‘enablement platform’ that provides businesses with a ‘plug-and-play’ way to launch digital currencies (rather than their own separate blockchain). This goal is perhaps unsurprising, as Vulcan was created by Bloq, a startup seeking to help businesses feel more confident when using the bitcoin blockchain.

Allen said Bloq has created tools for clients to launch a “multi-asset blockchain” that will allow users to issue digital assets, with identity services and compliance services provided by Netki and Libra.

Roszak said Vulcan is currently in discussions with a central bank to use the service, and that a key advantage the platform offers is that it includes many of the features needed to use dollars or pounds abroad.

He also said:

“We don’t see this as being antithetical to the principles of cryptocurrency, but rather about bringing cryptocurrency to a wider user base. We have the expertise to educate regulators, businesses and the wider population about the benefits of digital currencies.”

Understand the resistance

According to Allen, Vulcan represents the culmination of more than two years of work by PwC in this area.

But while the achievement is unusual by today’s industry standards, Allen said he believes PwC has addressed real obstacles by creatively leveraging its services and existing brand recognition.

For example, Allen said PwC has made progress in Australia, asserting that his firm has had active dialogue with regulators and has successfully allayed concerns about consumer protection and compliance.

However, Allen reported that regulators are still learning about blockchain and more progress is needed before the service can be widely adopted.

“There’s a lot of education that needs to be done, and some customers are resistant to cryptocurrencies in many ways, which is a barrier to adoption of digital currencies in general. We use our relationships with these customers to try to understand where the resistance is and then use the resources we have to overcome that resistance.”

In his remarks, Allen was full of praise for Bitcoin, saying it showed that digital currencies could bring "tremendous utility" and provide a viable model for businesses to launch similar networks.

Allen said:

“As far as digital currencies go, Bitcoin is simply the only one that’s dominant.”

Future Development

Although this development could bring more corporate institutions to the public blockchain, the project is currently entering its first phase.

Allen said the platform is currently operating as a proof of concept and will be demonstrated publicly at the Singapore Fintech Festival this week.

Allen said:

“We are using this event as a springboard to tell the world about the work we are doing.”

He expects the Vulcan announcement to help increase traction and bring more companies to the platform, and more progress may be announced next year as various projects mature.

He concluded:

“We have a strong organization that sees the merit of what we are doing, and we look forward to moving into proof of concept soon.”