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Blockchain, Crypto, Uncategorized

Blockchain and crypto update – initiatives progress but some stall

There have been quite a few developments in the blockchain and crypto currency world since our last post on the topic (see here).

Blockchain initiatives
BTL has announced here that their “Interbit” chain joining platform will be test launched on 23rd April. This article on the Platts web site discusses its application in energy trading, with the launch seeing the next stage of a pilot which supports ” confirmations, actualisation, invoice generation, settlement, audit, reporting and regulatory compliance.” The pilot involves several market participants in energy trading.

This article on the Reuters web site provides an update on the progress of the Enerchain initiative, which aims to support direct trading of wholesale energy between counterparties. The article looks at regulators’ stance on such initiatives and offers some views on regulatory status. In the meantime, this article on the Decentralised Energy web site looks at an initiative in Japan where blockchain is being used to support peer to peer trading at the distribution level.

While there are many projects in flight, the proportion that do not reach production appears to be high. This article on the Tabb Forum by Stuart McClymont of base60 Consulting looks at a recent report by Deloitte highlight the issue, and gives some pointers as to how to select appropriate use cases for blockchain and distributed ledger projects. This includes the need for a standardised model to support the processes covered. Standardisation was also supported in comments made by a DTCC representative at a recent forum, as reported here on the Investor Daily web site.

This article on the American Banker web site reports on the stalling of some blockchain initiatives in the financial sector. Reasons suggested include the lack of a business case, questions regarding  the technology and legal issues. The declining interest seems to be supported by a survey reported here on the Tabb Forum.

Never the less, regulators appear to generally support blockchain use. This transcript of a conversation between Siobhan Hall, Rosemary Griffin and Henry Edwardes-Evans on the S&P Global Platts web site discusses blockchain use in energy, and regulators’ stances in Europe and Russia. The CFTC also intend to support blockchain initiatives as reported here on the Tabb Forum in an article by Allan Grody of Financial InterGroup.

Crypto regulation
The topic of the regulation of crypto currencies has not gone away with different rules in different jurisdictions, as summarised in this post on the Business Times web site. A recent G20 meeting saw regulators agreeing to take a watching brief on crypto developments, as reported here on the Reuters web site. It is felt that at this stage, crypto use is still small enough to avoid systemic risk. The Financial Stability Board published this letter to the meeting, summarises this and looks at some pros and cons of cryptos.

The CFTC has been backed by a New York district judge in their view that cryptos can be classified as “commodities” as reported here on the Coinbase web site. This will have some implications for US regulation. In the meantime, France’s AMF has opined here that  transactions with a crypto underlying should be classified as derivatives. This view has many consequences under MiFID II, EMIR and other regulations. At the same time they have published this warning about several crypto web sites.

The news is still plentiful on all related topics. We will bring further summaries over the coming weeks.

 

 

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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