Capital Markets Advisors

Turning Change Into Opportunity

logo

September 30, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA
Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
Lately, there’s been a lot of talk regarding the possible or eventual regulation of blockchain technology. Although this is a very interesting issue, is it the technology that we’re regulating or the products, processes, and services supported by this technology that are subject to regulation?
 
Regulating Technology?
It seems that almost everyday now, there’s an article or two in our “in-boxes” speaking to blockchain and distributed ledger technology and: federal review, state and local government evaluation, congressional committee evaluations, as well as finance and regulatory requirements for acceptance. While all new and invigorating, these activities are actually being driven not by BC & DLT, but rather, the application of this tech to our current markets as well as potentially new processes/products derived from these applications.
We need to remember that technology is only the “means to the end”. We DON’T regulate the trading system a trade is done on, but we DO regulate the trade itself. There AREN’T regulations surrounding the database we use to store our data, but there ARE regulations surrounding the use of it. When someone says, “Well, don’t we regulate the internet?”, we need to clarify that statement with the fact that it’s the process that is actually being regulated, not the platform. Consumerism, retail trading, medical billing, to name a few, all are heavily regulated processes and/or products. The internet really functions as a series of on/off ramps as an efficient delivery system.
What do we regulate?
Regulation discussions have come to the forefront primarily due to the removal of the spoke & hub central authority figure and replacing it with a decentralized automated environment where executables take place based on defined sets of information and predefined set of rules and agreements.
When looking at smart contracts (which we discussed a few newsletters back), many state and local governments are now trying to figure out how to make a smart contract a true legal representation of the agreement between the associated parties. For example, let’s take Vermont bill H737. This bill seems to be directed at Digital Identity (DI) and the fact that Identity (as well as other contract terms) can be established in the Blockchain world by a ‘Mathematically Secured’ method.  It seems to be saying that the identity (and other contract terms) of the parties established that way will be acceptable under the legislation.  This is quite important as currently parties to a contract are typically verified by their physical signatures and/or a trusted third party such as a notary who verifies their identity.
When we look at Bitcoin or any crypto-currency, again the potential regulations discussed are not directed towards the blockchain and distributed ledger, but rather the currency itself and the exchanges on which it trades. While discussing digital issuance, again, it’s applying regulations and standards to new forms of existing business and products.

Bridging the Gap:
People often fear new things when regulation may be applied. However, it’s important not to mistake the regulation of systemic output of a new technology with the actual regulation of the tech itself. Blockchain, Distributed Ledgers, and Smart Contracts all are technological tools that will allow us to advance in our markets with greater transparency, efficiency, and less friction. While regulatory guidelines must continue to adhere to our current products and processes, we must not confuse the continued application of current regs and standards with the need for regulations on the actual supporting technology i.e.: blockchain.
We encourage any of our readers to contact us if they’d like to discuss any of these thoughts or issues. We’re always prepared to offer assistance and/or guidance as we navigate these new waters together.
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

September 16, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
Although it may seem a bit self-serving, we will discuss the growing need in the market today for people and resources who not only understand blockchain technology but also have a deep understanding of the financial markets, firms, and processes to which it’s being applied.
 
TO DATE:
Most of the activity around the introduction of BC and DLT to the financial community has centered around the technology providers and their growth & development. During this time. we continue to see a lot of innovation, development, and even academic involvement. With a primary goal of “building-out” this new technology, most end-users concerned (the financial institutions) have been embracing the expected positive results without really understanding just how those results will be attained.
THE LONG & WINDING ROAD:
With the current focus on development and the required funding to continue forward, most of the market attention has focused on the “latest idea” and the next round of capital. As much as the “buy-in” to this new technology is critical to these funding rounds, most of the firms sponsoring this growth are not really sure how it will actually integrate into their processes and workflows. While the market continues to watch this technology evolve and waits for widespread acceptance by its peers, the critical analysis and internal review of how these tech providers and their product will be applicable to the these firms is taking a back seat. While this seems to makes some sense in the order of events, financial institutions could find themselves behind the curve when the time comes to adopt and implement.
It’s paramount that, while managing through use-cases, proof of concepts, and straight out investments, market participants really understand the application of this tech to their particular processes. Although 3 banks may be performing the same task, there will probably be 3 distinct and different workflows for each of them. This functional gap in application is where knowledgable and experienced resources are necessary. Additionally, without addressing this functional gap at the institutional level, we can not even begin to consider the maturity of the technology at the industry level.

BRIDGING THE GAPS:
The world of Blockchain, Distributed Ledgers, and Smart Contracts contain endless possibilities when applied to financial institutions and their corresponding markets.
It is incumbent upon us to to help steer the developments and applications of this burgeoning technology as opposed to just sitting on the sidelines and waiting to see who succeeds or fails first. With that said, NOW is the time for firms to begin developing both their tactical and long term strategies as well as the resources to support them. The cost of doing nothing at this time is simply is too great. We encourage any of our readers to contact us if they’d like to discuss any of these thoughts or issues. We’re always prepared to offer assistance and/or guidance as we navigate these new waters together.
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Evolutionary Stages to General Acceptance
BC Timeline Marked

 


September 6, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This week, we’re leaving our “standard update format” and will focus this weeks’ newsletter on Smart Contracts.

We hope you all enjoyed the Labor Day weekend and are back feeling fresh and reinvigorated.
 
PAST TWO WEEKS:
As Blockchain Technology continues to make its way into just about all mainstream financial institutions, we’ve seen many process oriented efforts involving Blockchain, Distributed Ledgers, and Smart Contracts. However, these last few weeks have given a greater focus to another extremely important aspect of the markets: payments, money transfer, and settlements.
GROWTH:
Four of the world’s largest banks, along with an international broker, have announced an effort to develop a new form of digital cash that may very well become an industry standard to clear and settle financial trades over a private, permissioned Blockchain network. The banks behind this “utility settlement coin”, or USC, will pitch the idea to central banks, aiming for a launch by early 2018. The Utility Settlement Coin, based on a solution developed by Clearmatics Technologies, will allow financial institutions to pay for bonds, equities, and other securities, without waiting for traditional money transfers to be completed. They would use digital coins that are directly convertible into cash at central banks thereby increasing efficiency, transparency, and cutting the time and cost of post-trade settlement and clearing. UBS, Santander, BNY Mellon, Deutsche Bank join with broker ICAP in the initial consortium undertaking this effort to “digitize real currencies”.
Also interesting this past week, we see the World Federation of Exchanges (WFE) finally discussing the possibilities of Blockchain for their exchange members. This interest is primarily based around standards and security. Although no clear cut move to BC has been seen by an exchange, it’s encouraging to see the analysis at this level so as to properly validate the value proposition of such an undertaking.
Continuing to demonstrate the uniqueness of Blockchain Technology across a multitude of markets and industries, Metlife, has also joined R3 in the recent weeks. Additionally, the Hyperledger Project has seen 17 recent new members including Samsung, Intuit, Airbus, and heavy machine manufacturer Sany.
 

SMART CONTRACT’s CONTINUED EVOLUTION:
Contrasting the USC payment solution discussed above, Visa’s announced its latest blockchain trial which will focus on interbank payments utilizing Smart Contracts. Visa has partnered with Toronto-based BTL Group to explore how the startup’s interbank settlement system can leverage blockchain and smart contracts to streamline domestic and cross-border payments between banks. Different from the token based digital cash effort above, this Proof of Concept venture clearly demonstrates that there is more than one way to manage payments utilizing Blockchain Technology. Each initiative addresses situations with their own unique requirments. Digital Currencies are just that; a real currency with a digital representation. Transfers of these “currencies” are straightforward and direct. Alternatively, Visa is utilizing Smart Contracts to deal with the various complexities of their international payments and rules that govern them. When faced with issues like currency conversion, business regulations, multitudes of local compliance issues, just to name a few, Smart Contracts are the obvious choice to autonomously manage these money transfer events.
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Stirring the Pot:
Notable Events from the Block Chain and DLT Community

Visa Incubator to Test Blockchain for Interbank Payments 

Pete Rizzo (@pete_rizzo_) | Published on September 1, 2016 at 13:27 BST

Exchanges call for regulatory clarity over blockchain useBUSINESS NEWS | Thu Aug 25, 2016 7:21am EDT

Four Global Banks Team Up to Develop New Utility Settlement Coin Based on Blockchain 

By Richard Kastelein – August 24, 2016

August 19, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This week, we’re leaving our “standard update format” and will focus this weeks’ newsletter on Smart Contracts.
 
Introduction
As the markets have begun to invest in Blockchain and Distributed Ledger Technology, it’s become increasingly apparent that Smart Contracts are not only useful but quite necessary to execute the required movements on the ledger. Smart Contracts contain the executable terms of an agreed process and then use those terms to execute action in an event driven environment. As Smart Contracts have grown to become key drivers in much of the Finance Industry’s efforts, we’ve begun to see many of the players work closely to define, update, or just give opinion on this piece of technology.
 
Is a Smart Contract a Contract?
Smart Contracts are currently finding practical application when working with Security Issuance, Catastrophe Swaps, Security Lending & Finance, Alternative Trading Systems, Collateral & Margin movement, Post-trade settlement, Energy Management, Corporate Share Registry, and many more.
All these different Smart Contract uses and applications are all set in common ground. They all contain the financial and functional terms that allow them to execute. The “real world” terms are also driven by ‘real world” events. These event driven actions do not require human intervention until, if necessary, requested (i.e. delivery of physical goods). While this criteria may seem to imply that a Smart Contract (SC) represents a legally binding contract, the truth is that all the SC does is gather the actionable terms of the agreement and uses that code to respond to events.
In its current state, the Smart Contract is the ’embodiment’ of the legal agreement but NOT the agreement itself. Although it represents the desired results of all concerned parties, it is not the legally binding contract ……..YET. With the growth of Smart Contracts and their increasing prevalence in the use of Blockchain and Distributed Ledger Technology, there is a growing interest to include the legal construct within the Smart contract itself.

Why use Smart Contracts?
Smart Contracts allow for the automation of the terms of a contract in a way that has not been available before the advent of Distributed Ledgers. With a Distributed Ledger and a Consensus mechanism, the Smart Contract gives the parties to a Contract certainty that:
  • All executable actions are being recorded.
  • All transfers of value are happening at the appropriate time.
  • All calculations are correct as well as recorded.
  • Identities are correct and verifiable.
  • The actions are systemically secure.
  • Only the relevant parties to the transaction will have access to the information.
Given these strong attributes, we believe that Smart Contracts should exist on a permissioned/closed network as opposed to a permissionless/open one.
When is a Smart Contract A Contract?
Given the depth and breadth of Smart Contracts in the Financial Markets arena, it seems like a natural extension to begin to include the relative legal construct and true identity authentication in the generation of Smart Contracts. As members of the Chamber of Digital Commerce and charter members of their Smart Contract Alliance, we are working diligently towards broadening the scope of Smart Contracts to become ubiquitous with a legally binding contract.
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Stirring the Pot:
Notable Events from the Block Chain and DLT Community

Bank of America Merrill Lynch, HSBC, and IDA develop a blockchain prototype solution for trade finance

Luke Parker, 15 Aug 2016

R3 Rolls Out Trade Finance Solution Using Blockchain TechnologyBy Richard Kastelein – 

August 5, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA
 

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
 
PAST TWO WEEKS:
As Blockchain Technology has clearly made a break from being confused as “just Bitcoin”, many local and federal regulators and politicians are now looking for information and guidance regarding current Blockchain developments. In an open letter to the Fed, the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and the National Credit Union Administration, twenty-two US senators have requested information about the regulation and oversight of virtual currencies and blockchain technology. We view this request for information as a positive step in the evolution and acceptance (?) of Blockchain and Distributed Ledger Technology. With the recent court cases and rulings in Florida and North Carolina, it’s clear that our governing bodies are waking up to the fact that Blockchain & Crypto-currency is here to stay. Now, how do we navigate the growth and development cycle without unintentionally running afoul of current legal and regulatory structure AND do it in such a way that were not handcuffing ourselves as we move forward?
 
GROWTH:
The finance industry has been spending a lot of time and resource evaluating Blockchain tech for payment processing. Mizuho Financial Group announced last week that it will pilot Ripple’s distributed ledger technology for use regarding cross-currency settlements. This trial focuses on currency settlement and follows the previous trial (March) in which they used the Open Assets protocol, the bitcoin blockchain protocol, for cross-border securities settlement.
We’ve also seen our first media giant join the R3 Consortium this week as Thompson Reuters now takes a seat at the R3 Table. This move also demonstrates the uniqueness of Blockchain Technology across a multitude of markets and industries. Historically, technology was typically driven by a specific market or industry. However, Blockchain Technology is coming to fruition across multiple industries concurrently. This is truly the beginning of Tech-Connectivity or “Techtivity”.
Also, one last comment regarding the DAO – “Hate to say we told you so but, ……”
 

SMART CONTRACT’s CONTINUED EVOLUTION:
As Smart Contracts have grown to become key drivers in much of the Finance Industry’s efforts, we’ve begun to see many of the players work closely to define, update, or just give opinion on this piece of technology.
Many believe that smart contracts should be “tamper-proof”. However, arguing that contracts should be resistant to change may cause issues down the road as the markets change or evolve. Natural questions that fall from this thought are:
  – How would you stop such a smart contract from executing if necessary?
  – How would you reflect a defect that had been fixed and then re-issue it?
The term “smart contracts” should embody two definitions:
1) Execution of obligations, within a shared ledger
      – what are the defined roles and executables within the smart contract?
      – what are the dependencies relied upon and/or created?
2) Informational aspects of the contract written.
      – who are the legal parties (if any) to the contract?
      – what are the binding legal terms?
      – what are the ramifications of avoidance
      – any and all other legal terms
Also, when thinking about smart contracts, is turing applicable/necessary or should the smart contract be defined in a very clear manner that gives us the expected actions without potentially getting lost in an infinite loop?
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

 


Stirring the Pot:
Notable Events from the Block Chain and DLT Community

Barclays Collaboration Sets Forth Vision for Smart Contracts Future 

Pete Rizzo (@pete_rizzo_) | Published on August 4, 2016 at 20:09 BST

Thomson Reuters to Join R3 Blockchain Consortium – First Major Media House to Sign OnBy Richard Kastelein | August 2, 2016

Mizuho to Conduct Blockchain Payments Trial With Ripple 

Pete Rizzo (@pete_rizzo_) | Published on July 20, 2016 at 14:15 BST

http://www.coindesk.com/mizuho-ripple-trial-sbi/

Florida judge: Bitcoins aren’t currency, so state money laws don’t apply
CYRUS FARIVAR –  

Hawk: The Blockchain Model of Cryptography and Privacy-Preserving Smart Contracts
Ahmed Kosba and Andrew Miller and Elaine Shi and Zikai Wen and Charalampos Papamanthou

July 22, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


 

Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
 
PAST TWO WEEKS:
Lately, the topics most bantered about the hallways of the central banks around the world have been: blockchain payments, digital securities, digital currency, and of course, smart contracts. It seems that during this period of financial services and banking embracement of the blockchain technology, we see new and interesting commercial explorations every four to six weeks. Brexit, Turkey, the impending US election along with flat rates and negative yields around the globe, have prompted us all to leave no stone unturned and look for ways to maximize this new technology.
 
GROWTH:
As we have mentioned the DAO hacking a few times over the last few newsletters, we just want to mention the hard fork was launched on Wednesday afternoon. This solution seems to have many cheering and celebrating (especially at Ethereum) over the final return of approximately $40mm (original near $67mm at the time of the hacking) of Ether. Although the return if this devalued Ether is somewhat good news, we still find ourselves wondering how this “revisionist history” is going to effect the Ethereum eco-system. As a cautionary approach, we certainly hope  that the same or similar mistakes that were made when launching the DAO are not made again. Only time will tell, but we’re not too sure if the market would be surprised by a return hacking visit to Ethereum.
As the clamoring for a credit trading solution continues, central banks from the UK, EU Asia, Canada and the US have all been wrestling with the concept of digital payments, digital currencies, and digital security issuance. The combination of Blockchain, Distributed Ledger Technology , and Smart Contracts is beginning to really open the eyes and minds of just about every banker and regulator. That said, there are as many nay-sayers as there are true believers and proponents of this type of evolution. The important thing to take away here is that not so long ago, it was generally accepted that payments and money transfer would “always function the way it has” and that BC really wasn’t much of an enhancement. Today, we have many senior members of global central banks actually debating the merits of employing BC/DLT technology.  Interesting times, to say the least.

SMART CONTRACT’s CONTINUED EVOLUTION:
As touched on above, especially with the central banks, Smart Contracts are clearly the tool that is necessary to move forward with digitization and payments. It’s interesting that not even six months ago, Smart Contracts were considered a unique concept in the world of finance and banking. As we all tried to dig deeper to see how the BC/DLT revolution can help our business, we recognized that it was the Smart Contract that could truly help us maximize Blockchain Technology.
When we use Smart Contracts to make defined and formulated decisions that direct the activity of the Blocks and the Ledger Postings, we finally begin to allow machine-to-machine transactions to evolve. With that said, it’s important to remember that the pathway to the future doesn’t absolve us of oversight and responsibility. In fact, it is incumbent upon us more now than ever before to develop and maintain mutually accepted standards as well as strong governance over our processes.
And while we are all Finance and Banking folks here, it’s important to take note of all the non-financial services sectors that Smart Contracts and BC/DLT are becoming prevalent in. Through extension, we have become familiar with efforts regarding digital rights management, insurance claim management, behavior incentive programs, and digital identity management. It just goes to show, the Finance and Banking Industry is not alone…..AND … it’s just going to continue to get more CROWDED!
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Stirring the Pot:
Notable Events from the Block Chain and DLT Community

IBM Delivers Secure Blockchain Services in the Cloud
By Darryl K. Taft   |  Posted 2016-07-17  Print

Mizuho to Conduct Blockchain Payments Trial With Ripple 

Pete Rizzo (@pete_rizzo_) | Published on July 20, 2016 at 14:15 BST

http://www.coindesk.com/mizuho-ripple-trial-sbi/

North Carolina Governor Signs Bitcoin Bill Into Law 

Pete Rizzo (@pete_rizzo_) | Published on July 6, 2016 at 20:05 BST


July 8, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA
 

Welcome to CHAINmail; CMA’s Block Chain Newsletter.
This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
 
PAST TWO WEEKS:
These last few weeks have been filled with activity fueling the growth of Block Chain efforts and, in particular, Smart Contract development. Brexit has opened the doors to every aspect of economic support, arbitrage, and investment. The most recent topics circling around: fx, collateral, security issuance, and credit. YES, we said it… CREDIT!
Since the crisis of ’08, our credit derivative market has downsized  by nearly 80%. Single name credit protection is increasingly scarce  and difficult to price. If there was ever a need for transparency of inventory, protection, and pricing, Brexit and the European Community has really begun to make the case. We also note international interest from both Asia and South America in US tech, R3, and the HyperLedger Project. Clearly, global acceptance is growing. Regarding Bit-Coin, Brexit has sent it on a pricing tear as the Euro declined and now stagnates. Will the “halving” have any measurable effect on BTC pricing as the Euro, GPB, Gold, and Oil continue to trade at very new levels?
 
GROWTH:
Looking back at the DAO hack situaiton and the failure of the soft-fork solution, a proposed hard-fork will be established shorty with the ramifications of this “reboot” to be made more evident as Etherium migrates down the fork. Questions we ask: Does a hard-fork violate the spirit if not the intent and logic of Smart Contracts? Is this change in protocol, although accepted via concensus, the beginning of an entirely different environment? Does the need for a hard fork and the ability to create one demonstrate the centralization of this decentralized experimental eco-system?
On the international front, we’ve just seen a group of Russian banks and institutions come together to form their own Block Chain Consortium. This group which also includes payment company QIWI and Accenture was announced earlier this month and aspires to be “Russia’s R3CEV”. Speaking of R3, Banco Bradesco has just joined the ranks as the first major banking institution from Brazil alongside of new comer from China, Ping An Insurance. Global representation continues  to grow and thrive.

SMART CONTRACT’s CONTINUED EVOLUTION:
As touched on above, we’ve seen a lot of activity regarding FX position mamagement, and collateral compliance. Prime Brokers and investors are very keen to gain transparency with regards to currency positions and their associated/correlated risks. In the ever-increasing world of margin requirements and settlement restrictions, the need to fill and agree postings has also become fodder for smart contracts.
Digital Securities are also a more common occurrence and becoming much more generally accepted.  When we think about securities we also think about protection and the credit markets. Given our recent economic events and interest rates, the market is making a lot more noise for credit and credit derivative solutions. Smart contracts, by their inherent design and nature, are perfect tools for just such applications.
It’s also important to remember that NOT all issues can be, nor should they be, solved by Block Chain or Smart Contract Solutions. Before entering into the BC/DLT development world, it’s important to understand what the problem that you’re trying to solve for is. Is it a process that could better be served on a distributed ledger? Is it based on executables requiring parameters, rules, and logic? Is it an issue that can be solved though the removal of manual intervention? Sometimes, the answer is just no. Although BC and DLT are very powerful, malleable, and agile solutions, they are not a panacea for of all of the market’s woes.
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.


Stirring the Pot:
Notable Events from the Block Chain and DLT Community
 

Why Blockchain Immutability is a Perpetual Motion Claim 

Chris DeRose | Published on July 7, 2016 at 13:00 BST

Russian Finance Firms Form Blockchain Consortium 

Stan Higgins | Published on July 1, 2016 at 16:47 BST

Chinese Finance Giant Joins R3 Blockchain Consortium 

Michael del Castillo (@DelRayMan) | Published on May 24, 2016 at 20:56 BST

http://www.coindesk.com/chinese-finance-giant-r3-blockchain/

McKinsey Report Weighs Blockchain Impact on Insurance Industry 

Michael del Castillo (@DelRayMan) | Published on July 6, 2016 at 17:00 BST

ICAP is Building a Blockchain ‘Rosetta Stone’ to Enhance its Post-Trade Process 

Michael del Castillo (@DelRayMan) | Published on July 1, 2016 at 14:01 BST

 


 

 June 22, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter. 

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
After a quick but grueling travel schedule these last two weeks, we are back to discuss the latest issues in the Blockchain space.
 
PAST TWO WEEKS:
These last few weeks have seen continued activity across several fronts resulting in what appears to be an “alignment of purpose and understanding” as market participants move forward with each of their respective projects, pilots, and use-cases. Whether firms originally were “all-in” or “doubting Thomas’s”, it seems that most have met somewhere in the middle with a common expectation and approach based on cautious optimism anticipating significant long-term cost savings, resource allocation, and more efficient processes.
 
GROWTH:
Investments in this brand of technology have continued to grow with one of the most recent being a crowd funding of nearly $150mm raised for the Digital Autonomous Organization (DAO). Representing interests to promote the use of Smart Contracts by way of Ethereum Protocols, DAO creates a flexible, decentralized, and autonomous organization for users. As an aside to the creation of the DAO, we’ve observed and interesting (and possibly?) correlated rise in the price of Bitcoin and the GBTC. 
 
RESEARCH:
We’ve seen several traditional Wall Street firms release research and analysis defining potential savings of billions of dollars with some estimates as high as $14bn through the implementation of Blockchain, Distributed Ledger Technology, and Smart Contracts. Across the the entire marketplace, long-term savings estimates could quite possibly go even higher. As we devise and progress through various use-cases and concepts, it has become clear that most of our industry focus will be around the Smart Contract.
 

SMART CONTRACT’s CONTINUED EVOLUTION:
When they first came to market, participants all had varied views of what exactly a Smart Contract is: a legal agreement, a list of required rules, an action manager, etc.. Ultimately, they were all right. Smart Contracts are all of these things and, when implemented properly, will manage and execute an exchange of value made under a legal agreement in a very efficient and reliable manner. As we scratched our heads to work through various pilots and test cases, it has become apparent that the Smart Contract is the answer for most of our implementation and user requirements. Whether it’s machines talking to machines, the reduction of manual intervention, or even the compliance with some type of an agreement, the Smart Contract will meet all of those requirements.
It’s also important to remind ourselves that even with this cutting-edge technology and an open budget, we cannot move forward with improving our processes and creating efficiencies if we are not in control of, and fully aware of, our current processes. It is of paramount importance to understand the installed technological infra-structure. As we all look forward with bright eyes and anticipation, we must remember to “do our homework” or the past will prevent us from getting to the future. 
 
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Stirring the Pot:

Notable Events from the Block Chain and DLT Community

 

Bank of Canada Demos Blockchain-Based Digital Dollar 

Pete Rizzo (@pete_rizzo_) | Published on June 16, 2016 at 13:30 BST

http://www.coindesk.com/bank-canada-demos-blockchain-based-digital-dollar/

Blockchain Technology Gets a Hearing Inside the Fed’s Headquarters

PAUL VIGNA   | Jun 7, 2016 3:51 pm ET

http://blogs.wsj.com/moneybeat/2016/06/07/blockchain-technology-gets-a-hearing-inside-the-feds-headquarters/

Allianz pioneers Symbiont smart contracts for catastrophe swaps

By Ian Allison  |  June 15, 2016 14:10 BST

http://www.ibtimes.co.uk/allianz-pioneers-symbiont-smart-contracts-catastrophe-swaps-1565656

Santander is letting staff use the tech behind bitcoin to send money to each other 

Oscar Williams-Grut   |   May 27, 2016, 2:00 AM

http://www.businessinsider.com/santander-develops-blockchain-international-payment-app-with-ripple-2016-5


June 8, 2016 – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter. 

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.
After a quick but grueling travel schedule these last two weeks, we are back to discuss the latest issues in the Blockchain space.
 
PAST TWO WEEKS:
These last few weeks have seen continued activity across several fronts resulting in what appears to be an “alignment of purpose and understanding” as market participants move forward with each of their respective projects, pilots, and use-cases. Whether firms originally were “all-in” or “doubting Thomas’s”, it seems that most have met somewhere in the middle with a common expectation and approach based on cautious optimism anticipating significant long-term cost savings, resource allocation, and more efficient processes.
 
GROWTH:
Investments in this brand of technology have continued to grow with one of the most recent being a crowd funding of nearly $150mm raised for the Digital Autonomous Organization (DAO). Representing interests to promote the use of Smart Contracts by way of Ethereum Protocols, DAO creates a flexible, decentralized, and autonomous organization for users. As an aside to the creation of the DAO, we’ve observed and interesting (and possibly?) correlated rise in the price of Bitcoin and the GBTC. 
 
RESEARCH:
We’ve seen several traditional Wall Street firms release research and analysis defining potential savings of billions of dollars with some estimates as high as $14bn through the implementation of Blockchain, Distributed Ledger Technology, and Smart Contracts. Across the the entire marketplace, long-term savings estimates could quite possibly go even higher. As we devise and progress through various use-cases and concepts, it has become clear that most of our industry focus will be around the Smart Contract.
 

SMART CONTRACT’s CONTINUED EVOLUTION:
When they first came to market, participants all had varied views of what exactly a Smart Contract is: a legal agreement, a list of required rules, an action manager, etc.. Ultimately, they were all right. Smart Contracts are all of these things and, when implemented properly, will manage and execute an exchange of value made under a legal agreement in a very efficient and reliable manner. As we scratched our heads to work through various pilots and test cases, it has become apparent that the Smart Contract is the answer for most of our implementation and user requirements. Whether it’s machines talking to machines, the reduction of manual intervention, or even the compliance with some type of an agreement, the Smart Contract will meet all of those requirements.
It’s also important to remind ourselves that even with this cutting-edge technology and an open budget, we cannot move forward with improving our processes and creating efficiencies if we are not in control of, and fully aware of, our current processes. It is of paramount importance to understand the installed technological infra-structure. As we all look forward with bright eyes and anticipation, we must remember to “do our homework” or the past will prevent us from getting to the future. 
 
And, as always, we must ensure that we are consciously and carefully 
BRIDGING the GAP.

Stirring the Pot:

Notable Events from the Block Chain and DLT Community
 

State of Blockchain Q1 2016: Blockchain Funding Overtakes Bitcoin 

Garrick Hileman (@garrickhileman) | Published on May 11, 2016 at 15:15 BST

Blockchain’s Big Innovation is Trust, Not Money 

Jason Leibowitz | Published on May 21, 2016 at 16:57 BST

Goldman Sachs: Blockchain Tech Could Save Capital Markets $6 Billion a Year 

Pete Rizzo (@pete_rizzo_) | Published on May 25, 2016 at 23:44 BST

http://www.coindesk.com/goldman-sachs-blockchain-tech-save-capital-markets-12-billion/

DTCC Blockchain Video Series, Part 1: Closing the Gap Between Promise and Performance
http://www.dtcc.com/news/2016/june/06/dtcc-video-series

The Biggest Crowdfunding Project Ever-the DAO-Is Kind of a Mess

CADE METZ  |DATE OF PUBLICATION: 06.06.16


May 20th – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter. This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.

Post Consensus2016, we’ve begun to see a “settling of the Block Chain hype cycle” and more of a focus on actual BC and DLT projects and undertakings.
 
Consensus seemed to serve as a type of rubicon where business and technology came together for three days and parted with a greater understanding of how each other works and what they need to move forward. One of the resulting trends noticed has been increased soft-partnering between various complimentary BC firms.
It makes sense that, in the wake of capital markets firms now defining their use-cases, entities that can work together and deliver case results combine their efforts.
 
As the “gold rush mentality” begins to quiet and firms begin to move forward with their BC strategies, the actual work cycle is beginning in earnest. We expect this cycle to be a long one with stronger and weaker players identified over the period. As we move into and through 2017, we expect there to be a series of more formal partnerships, mergers, and acquisitions leading to a consolidation of technology providers.
 
With a wide variety of use-cases currently being bantered about, we look forward to seeing development and results regarding:
  • Repo Clearing
  • Collateral Management
  • OTC Swap Clearing
  • Cash Settlement 
  • Security Masters
  • Stock Loan
  • Security Issuance
  • Corporate Actions
  • Custody and Inventory
  • Syndicated Loans
  • Mortgages
  • Disaster Recovery 
  • …. and many more

Finally, we all welcome the “silence” of the settling hype as firms get down to work on moving forward with this technology. Although we can’t forecast the winners and the losers, we do expect several use-cases to prove not worthy for one-reason or another. There are many components to each of the market’s trade processes and they all must be addressed in order to move forward. However, at this point in time, it’s well worth the effort. As Granny used to say,”You got to break a few eggs to make an omelette”

And, as always, we must ensure that we are consciously and carefully “BRIDGING the GAP”.

sig

 

 

 


 Stirring the Pot:

Notable Events from the Block Chain and DLT Community

Wall Street Disintermediation Arrives as Hedge Fund Trades P2P Via Blockchain, Without a Bank or Broker
Source: Veritaseum US, May 10, 2016 at 14:13 BST
http://www.coindesk.com/press-releases/hedge-fund-trades-blockchain-without-bank/

Presidential Cybersecurity Panel Hears Blockchain Testimony By IBM
Stan Higgins | Published on May 16, 2016 at 21:24 BST
http://www.coindesk.com/presidential-cybersecurity-panel-hears-blockchain-testimony/

NATO Innovation Contest Seeks Military Blockchain Applications
Stan Higgins | Published on May 10, 2016 at 17:21 BST
http://www.coindesk.com/nato-innovation-contest-seeks-military-blockchain-applications/

Next Up on Blockchain: Reconciliation and Syndicated Loans
 BY CHRIS KENTOURIS
http://finops.co/operations/blockchain-technology-reconciliation-and-syndicated-loans-next-in-line/

Blockchain and the Race Towards Irrelevance
Matthew Spoke (@mattspoke) | Published on May 15, 2016 at 03:08 BST
http://www.coindesk.com/race-toward-irrelevance/


May 12th – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision
Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter. This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.

While we were at the Consensus2016 Conference last week, you may have noticed that we did not publish a newsletter. Armed with a lot of insight from the 3 days of presentations, round tables, debates, and demonstrations involving over 1,600 attendees, we are back with some interesting and relevant information and hope that you “miss us just a little bit less”

There were several reoccurring themes that made their way through the multitude of presentations and workshops at Consensus2016. Among the more prevalent were: Standards, Governance, Interoperability, Implementation, Use-cases, and Financial Inclusion

We heard from the Governor of Delaware and the state’s adoption of blockchain technology to move towards better, more efficient, and transparent management of various state run process and operations. Among the topics discussed were driver licenses, stock issuance, and record keeping.

We also heard from CFTC Commissioner Giancarlo stating that we need to embrace BC/DLT with a “DO NO HARM” attitude that is reminiscent of the regulatory stance throughout the growth and development of the internet.

Interesting discussions and commentary at Consensus2016:

  • Anonymity vs Privacy 
  • Machine to Machine decisions using blockchain
  • Standards are good – Premature Standards are bad
  • Blockchain is possibly the first “global fintech”
  • Value Proposition
  • Implementation Risk
  • Smart Contracts
  • Permissioned Ledgers
  • Interoperability
  • Digital Securities
  • Digitization of Assets
  • Decentralization
  • Disruption coupled with evolution
  • Collaboration between BC Developers and Users – Bridging the Gap

Finally, we are happy to see that past views shared with our followers and clients were also put forward during the many discussions at Consensus2016. If any of our readers would like to discuss any of the topics above or have any other BC/DLT thoughts or questions that you’d like to share, please feel free to drop us a line.

As always, we must ensure that we are consciously and carefully “BRIDGING the GAP”.
sig

 

 


Stirring the Pot:

Notable Events from the Block Chain and DLT Community

 

Settlement Experts Predict Three Fates for Blockchain at Consensus 2016
Michael del Castillo (@DelRayMan) | Published on May 3, 2016 at 16:04 BST

http://www.coindesk.com/?s=Settlement+Experts+Predict+Three+Fates+for+Blockchain+at+Consensus+2016

Ethereum: A Valuable FinTech Sandbox
Daniel Cawrey (@danielcawrey) | Published on May 6, 2016 at 14:30 BST

http://www.coindesk.com/ethereum-fintech-sandbox/

Consensus Blockchain Standards Panel: Industry Should Take Action
Stan Higgins | Published on May 5, 2016 at 20:30 BST

http://www.coindesk.com/workshop-explores-enterprise-standards-in-a-world-of-blockchains/

Deloitte Redefining Financial Services With Blockchain-Backed Digital Banking
BY DAVID GILBERT @DAITHAIGILBERT ON 05/04/17 AT 7:49 AM

http://www.ibtimes.com/deloitte-redefining-financial-services-blockchain-backed-digital-banking-2363840

Chicago’s CME Group bites on bitcoin, will publish daily price
Ian Kar | Published on April 19, 2016  | Ally Marotti on May 2, 2016 at 2:45
http://www.chicagotribune.com/bluesky/originals/ct-cme-group-bitcoin-prices-bsi-20160502-story.html

 


April 28th – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision

Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter.

This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.

The week, we’d like to take a moment to think about the multitude of Block Chain and Distributed Ledger efforts underway and the various platforms being launched or developed to support these individual undertakings.

Recent events in the the market have born many of the undertakings, pilots, and test cases that we see today. While most of these firms are moving forward with good reason and a vision of a better tomorrow, a bit of a “gold rush” mentality has become apparent. As we all move at this aggressive pace with the latest and greatest technology, we also need to be cognizant of where our business counterparts are going and how they are getting there as well.

We worry that, without some type of accepted industry wide standards, fragmentation and inefficiencies will rear their ugly heads.

Block Chain and Distributed Ledger Technology has the potential to create the most consolidated and sophisticated environments in the history of finance. However, if we don’t look forward with a common approach, we will introduce a great deal of fragmentation and potentially create more problems than we actually solve.

We believe in the power of Block Chain and DLT. We also hope that at this critical juncture, the participants do not fall prey to a gold rush mentality and a unilateral approach. Instead, we would expect to see a coalescing around their various undertakings while developing & agreeing to true standards, guidelines, and governing principles.

As the financial markets continue to venture forward with BC & DLT, it’s important to remember that we are not only introducing new technology and platforms.

We must ensure that we are consciously and carefully “BRIDGING the GAP”.


Stirring the Pot:

Notable Events from the Block Chain and DLT Community

Barclays Shows the First Ever Public Demo of R3 CEV’s Corda Platform
BY POLINA CHERNYKHON MONDAY, APRIL 18TH, 2016 6:52PM EDT
http://www.coinspeaker.com/2016/04/18/barclays-shows-the-first-ever-public-demo-of-r3-cevs-corda-platform/

Korean Securities Broker Inks Deal with Local Bitcoin Exchange
Stan Higgins | Published on April 18, 2016 at 21:29 BST
http://www.coindesk.com/korean-securities-broker-inks-deal-local-bitcoin-exchange/

Collaboration and Consensus Are Essential to Harnessing Blockchain
Michael Bodson | Published on April 18, 2016 at 18:31 BST
http://www.coindesk.com/collaboration-and-consensus-essential-to-harnessing-blockchain/

Blockchain Symposium Audience Poll
Published on April 18, 2016
http://www.dtcc.com/news/2016/april/18/blockchain-symposium-audience-poll

Money keeps pouring into blockchain startups
Ian Kar | Published on April 19, 2016
http://qz.com/662596/startups-are-raising-huge-rounds-to-feed-wall-streets-fascination-with-blockchain/

Digital Asset Holdings Acqui-Hires Smart Contract Startup
Michael del Castillo (@DelRayMan) | Published on April 20, 2016 at 19:34 BST
http://www.coindesk.com/digital-asset-acquires-elevence/

Intel Conducting Experiments to Massively Scale Blockchain
Sid Kalla | Published on April 21, 2016 at 16:52 BST
http://www.coindesk.com/intel-hardware-security-blockchains/

Morgan Stanley report dampens distributed ledger hype
Published on April 24, 2016
https://www.finextra.com/newsarticle/28786/morgan-stanley-report-dampens-distributed-ledger-hype


April 20th – CHAINmail

Market Updates and Commentary from the Block Chain Community
brought to you by CMA


Chainge-ing the Vision

Thoughts from Scott Mehlman & Mike Zimits of CMA

Welcome to CHAINmail; CMA’s Block Chain Newsletter. This is where we offer our comments and insight on the topic as well as a short list of this week’s interesting BC/DLT developments.

Blockchain and Distributed Ledger Technology are perhaps the most efficient and powerful set of tools that this market has seen since the advent of the internet. Through its evolution and growth in the world of Bitcoin to its never-ending number of pilot programs and use-cases on Wall Street (and elsewhere), this new technology has the potential to be the greatest disruptive as well as evolutionary force the financial markets have ever seen.

However, superior technology is only half the equation. BC and DLT can only be successful if the business applications, assumptions, and parameters are correctly taken into account. This includes proper firm-wide as well as industry-driven governance and guideline adherence.

The implementation process is of utmost importance while transitioning to this “brave new world”.


Stirring the Pot:

Notable Events from the Block Chain and DLT Community

Successful Blockchain Test Completed by Axoni, DTCC, Markit,
and Multi-Bank Working Group – April 6, 2016 (New York London)
http://www.dtcc.com/news/2016/april/07/successful-blockchain-test-completed

MUFG Building Blockchain Proof-of-Concept for Promissory Notes
Stan Higgins | Published on April 11, 2016 at 22:31 BST:
http://www.coindesk.com/chain-mufg-blockchain-promissory-notes/

Bank of Ireland and BNP Paribas announce blockchain breakthroughs
05 April 2016
https://www.finextra.com/newsarticle/28698/bank-of-ireland-and-bnp-paribas-announce-blockchain-breakthroughs/security

Ethereum Used for ‘First’ Paid Energy Trade Using Blockchain Tech
Michael del Castillo (@DelRayMan) | Published on April 11, 2016
http://www.coindesk.com/ethereum-used-first-paid-energy-trade-using-blockchain-technology/

Australia Calls for Global ISO Blockchain Standards
13/04/2016  Samburaj Das
https://www.cryptocoinsnews.com/australia-calls-global-iso-blockchain-standards/

The 7th Annual Business Process Management and Technology Innovation Forum
Mike Zimits and Scott Mehlman will be discussing BC and DLT and chairing a panel at this conference
http://www.fsokx.com/FsoEvent/7th-Annual-Business-Process-Management-and-Technology-Innovation-Forum/Introduction

  • Connect With Us

    Visit Us On FacebookVisit Us On TwitterVisit Us On Linkedin