Exchanges call for clear regulatory policies for blockchain applications

Rage Review : Since unclear regulatory policies will hinder the development of blockchain technology, and blockchain technology can play the greatest role in the field of clearing and settlement, exchanges around the world are calling for clear regulatory policies to catch up with the trend of blockchain technology to avoid being marginalized. The risks that need to be addressed urgently include security standards for maintaining decentralized databases, legal and regulatory uncertainties, and concerns about expansion.

Translation: Nicole

The world's largest exchanges said on Thursday that a lack of clear regulation is hampering the development of blockchain technology and thus failing to save costs on securities trading.

The World Federation of Exchanges (WEF) asked its members for specific plans to use blockchain, a tamper-proof shared ledger that can automatically process and settle transactions using a computer program without the need for third-party verification.

More banks this week joined the ranks of developing blockchain technology because of its potential to save costs.

WFE said blockchain could be most useful in the clearing and settlement space because it could remove cumbersome paperwork while also exchanging legal ownership of securities for cash.

In a statement, the WFE said:

“Financial market infrastructures are uncertain about the extent to which blockchain technology, particularly when applied to capital markets, will deliver on its promise.”

“They also highlighted a number of risks that need to be addressed urgently, such as security standards for maintaining a decentralized database, legal and regulatory uncertainty, and concerns about scaling.”

The WFE said blockchain is intended to combine trading, clearing and settlement, but current laws and regulations treat these separately.

The WFE also said that the interests of the current system are also one of the obstacles to the development of blockchain technology.

The WEF survey is based on responses from 24 exchanges and clearing houses, such as the Chicago Mercantile Exchange, Deutsche Börse, China Financial Futures Exchange, LCH.Clearnet, Japan Exchange Group, Nasdaq and Singapore Exchange.

Many exchanges and clearing houses are studying how to use blockchain technology to avoid being marginalized.

The Advisory Committee of the International Organization of Securities Commissions, a global umbrella group of securities market regulators that studies the impact of blockchain technology, is also involved in the investigation.