Crypto Trading Not Best Use of DLT: Survey
Posted by Colin Lambert. Last updated: January 19, 2023
A survey of senior executives at 300 financial institutions by Six Digital Exchange finds that only 20% of firms believe that the trading of cryptocurrencies is a good use of distributed ledger technology (DLT). Instead, over half (56.23%) of respondents think DLT would either be better used to drive new revenues, or finding cost savings from existing business.
Just under a third (32.92) of asset managers said that creating greater efficiencies from existing business is the best use of the blockchain right now, Six says, adding in contrast, over a third of investment banks (35.71%) stated that DLT is best used for currency payment and cash settlement services.
The findings come as the FTX post mortem continues, with regulators and central banks reviewing how investors can achieve the same levels of protection and market resilience that they have in traditional markets.
“FTX operated from a jurisdiction [the Bahamas] which lacked effective and transparent regulation governing the crypto trading services that it was offering customers,” says David Newns, head of Six Digital Exchange. “However, the trading of crypto, as our research shows, is not ultimately where the central benefits of this technology lie. There are numerous ways digital assets could be deployed in the traditional financial system to create more resilient markets. Using digital tokens for the issuance, trading and settlement of equities and bonds, for instance, could remove significant delays, costs and risks across the market.”
Javier Hernani, head of securities services at Six, adds, “Although the value of cryptocurrencies is very much up for debate, the potential for the underlying technology is undeniable. Across the spectrum of post-trade processes, DLT is well-placed to bring significant benefits, from greater efficiency to increased transparency. In a few years we expect this number to be higher, as market participants seek out new technologies to answer the many questions raised by the move to shorter and safer settlement practices.”