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Blockchain update – regulator comments and more initiatives

There have been several developments in the area of blockchain and Distributed Ledger Technology (DLT) use, including regulatory aspects, since our last post on the topic here.  For example this article on the Global Custodian  web site reports that DTCC have managed to handle increased volumes using blockchain, initially for settlement. At the same time, France’s AMF has approved a Central Securities Depository based on blockchain, Setl, to operate, as reported here on the FT web site.  This article on the Tabb Forum by R3 discusses the use of blockchain to meet KYC requirements.

Recently , Chris Giancarlo, the chair of the CFTC made further comments on the use of DLT and blockchain to aid supervision of the financial markets. The comments are reported on in this article on the Coin Telegraph web site.

In the crypto currency world, ESMA’s Securities and Markets Stakeholders Group  has recommended in this report that a wider range of tokens should be regulated under MiFID II. The report is summarised in this article on the Coindesk web site. At the same time, this article on FT.com reports that in some cases, the sale of crypto derivatives may be banned in the UK.

In the physical commodities world, initiatives also continue to move forward. For example, this article on the Reuters web site reports that the London Bullion Market Association(LBMA)  has moved forward with plans to track the movement of gold. This article on the Euromoney web site discusses komgo, a blockchain based trade finance platform for commodities. It examines how such platforms can be used to fight fraud in the physical commodities markets. In the energy world, the use of blockchain for peer to peer trading networks, particularly at the distribution network level, encompassing the “prosumer”, continues. This article on the Modern Diplomacy web site discusses some of the regulatory hurdles and changes that will be required for the vision to become reality.

The regulatory aspects of blockchain use will be further discussed later today at the S&P Digital Commodities Summit in London (see here).

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.

Discussion

One thought on “Blockchain update – regulator comments and more initiatives

  1. As a consultant working on a community energy scheme that will involve P2P trading, I would like to sound a warning that the use of blockchain will cause more problems than it solves. It’s not a panacea, especially when things like demographics, community values, local politics, and the restrictions of the UK Balancing & Settlements Code are taken into account. I can expand upon my thoughts, or see the last issue of Risk.net where my article is being published.

    Posted by Dr M Earthey | November 15, 2018, 3:12 pm

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