Thus far, 2016 has seen no shortage of financial incumbents touting blockchain, but perhaps the most surprising has been the warm embrace the tech has received from central securities depositories (CSDs), the entities that serve as intermediaries for securities transactions.
Given the role of these businesses as often the sole arbiters of national and international markets, there has long been speculation they might be among the businesses threatened by distributed ledgers, or blockchain-enabled database environments in which the entities that are today served by CSDs are able to transact more directly.
But, movements by the the Depository Trust & Clearing Corporation (DTCC) in the US and the National Settlement Depository (NSD) in Russia have shown a willingness to use blockchain as a tool to expand and improve CSD operations. The NSD announced in late April that it had carried out a proof-of-concept for how blockchain could be leveraged for electronic shareholder voting.
Built on the alternative blockchain platform NXT in partnership with DSX Technologies, the prototype seeks to help reduce pain points that, today, discourage shareholder participation at major meetings.
Alex Yakovlev, head of decentralized solutions at NSD, however, believes that this project only scratches the surface of what could be built with a blockchain-based system.
According to Yakovlev, blockchain opportunities currently fall into two camps: those that pursue cost reductions and “blue ocean” opportunities, and those that seek to rethink how the financial industry operates as a whole.
Perhaps surprisingly, Yakovlev said that for the NSD, its interest remains in the uncharted territory that is being carved out by cryptocurrencies like bitcoin and ethereum.
Yakovlev told CoinDesk: "At the very beginning, we came to conclusion that blockchain cannot provide more operation excellence within existing business processes and inter-company relations without global changes. … Blockchain is about business models that cannot be supported using centralized applications […]
