Regulators’ attitude towards blockchain technology is beginning to change

Rage Comment : At present, it seems that US regulators have begun to re-examine blockchain technology. Considering Blythe Masters's important position on Wall Street, her revelation that regulators have begun to change their stance must be pointed out. I believe that for regulators, blockchain obviously has more value that can be used for them, especially its security and immutability, which may be a more advantageous weapon for regulators. When regulators begin to become more and more familiar with blockchain technology (I believe DAH has done a lot of work in this regard), then they will obviously prefer to deploy it on a large scale in the entire financial system rather than the opposite.

Translation: Prince Gong

Financial regulators are buzzing about new uses for “blockchain” technology, which has the potential to prevent communications from being tampered with and make all kinds of transactions more secure, Blythe Masters, an executive at a blockchain startup, told Reuters.

Blockchain is the underlying technology of the well-known digital currency Bitcoin, which is often regarded as a controversial tool for quickly and anonymously transferring funds around the world, as this seems very attractive to drug dealers and those trying to circumvent capital controls.

Masters, who herself has been the subject of controversy for helping to develop the financial derivatives product CDS that created huge holes in financial companies' balance sheets during the 2007-2009 credit crisis, now says blockchain technology could be as important as the internet.

Masters, who is currently leading Digital Asset Holding, said

“Regulators are very interested in the potential of this technology to improve transparency, audit trails, transaction reporting, and reduce operational risk.”

Blockchain technology is powered by a global network of computers that can share and verify large-scale transaction ledgers. Any two parties can use it to exchange information, including stock transactions and legal contracts, without the need for a centralized institution to verify each transaction.

Masters said much of the “post-trade” infrastructure is outdated and that new technologies like blockchain are needed to remain competitive in a very challenging environment.

“More broadly, (regulators) want blockchain to bring more benefits to economic activity.”

She added that regulators are now starting to focus more on the benefits of the technology rather than its potential risks.

Banks reckon the emerging technology could save the industry by making their operations faster, more efficient and more transparent.

Regulators, however, have earlier said it is likely to reduce the role of intermediaries such as banks and clearing houses. They also said the technology does not fit into existing regulatory frameworks.

However, interest in blockchain technology has grown rapidly over the past year, and it has attracted investments from major institutions including Goldman Sachs, Citigroup, JPMorgan Chase, BNP Paribas and Deutsche Börse.

When Masters, the most high-profile woman on Wall Street, left JPMorgan Chase in 2014 after 27 years at the bank, she signaled that her goal was no longer to sell her startup at the next best opportunity.

Masters added that competition in the technology is currently fierce.

"If multiple parties are involved, then perhaps the advantages of this technology can be brought into play soon. There are also some other startups, including some giant IT companies, who are still developing and evaluating potential customers internally to assess whether they should develop such technology themselves or buy it directly."

Industry observers believe that giants such as IBM, Google, Intel and Cisco will be able to catch up with the development of this technology within 1 day.

Masters said,

"It's clear that the state of the internet is the same now as it was 25 years ago."