Nasdaq's vision for Blockchain
22 June 2015
Nasdaq has recently one become of the first leading capital market firms to consider the use of Blockchain and Bitcoin technology. It plans to use the technology in its private markets platform to begin with, with the possibility of using it in its clearing houses and CSDs at a later date. In some ways, this is the most significant commitment any large financial market firm has made to adopting Blockchain. Even more interesting is the manner in which Nasdaq has gone about the process. It has made one of its VPs an evangelist of the platform, with a strategic mandate. This is an interesting example of a tech-savvy firm utilizing an innovative approach to encourage and advocate for what it sees as the next big wave of change in the financial markets. However, the open architecture of Blockchain technology and the difficulty in controlling the kind of transactions that could happen through it make it complex to use, and there are some resultant security concerns as well, which is why large banks are normally reluctant to adopt such a technology. So the industry would have to put checks in place before there can be widespread adoption of Blockchain in capital markets. There are already some existing provisions with Blockchain to address these requirements, and we can expect more effort in this regard as time goes on.