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Stephen Scharf, the head of security at DTCC, warns against the potential systemic risk of blockchain and more.DTCC
The Depository Trust and Clearing Corporation today identified the blockchain as a potential threat to global financial infrastructure in its annual System Risk Barometer poll.
Among a number of potential threats identified by respondents from the financial services industry survey, blockchain, the first popular bitcoin technology, is listed as part of the broader fintech category.
The most interesting thing about the results, however, is that, just as the DTCC security chief has elaborated concerns about the blockchain, the securities giant, which annually delivers $ 1.6 trillion in securities, prepares to launch its own blockchain solution.
"DTCC embraces the promise that fintech innovations will further mitigate risk and reduce post-trade costs," said Stephen Scharf, chief security officer at DTCC, in a statement. "But as the industry continues to adopt fintech innovations, such as blockchain, AI and cloud solutions, we must ensure that these innovations do not jeopardize the security and security of the current global financial market."
One fifth of all respondents identified the broadest category of fintech as a potential systemic risk in 2019, with an increase of 5% over the previous year. Respondents were asked to identify the top five systemic risks they saw for the broader economy.
Blockchain was first used by bitcoins in 2009 to transfer value all over the world without the need for banks. While the cryptocurrency industry is currently in trouble, losing 80% of its value in the last year, the blockchain continues to be explored by JP Morgan, Northern Trust and a number of other companies financial.
The list of this year's systemic risks was outweighed by cybernetic risk, with 69% of respondents choosing it as a concern; geopolitical risks and commercial tensions, cited by 55% of respondents; Exit of Great Britain from the European Union (Brexit), cited by 49% of respondents; and an excessive global debt and the impact of new regulations, cited by 28% of respondents.
Although Scharf has warned of the potential negative impact of blockchain, which by its nature was designed to allow users to shift value without central authorities such as DTCC, the clearing giant is in the final stages of its blockchain project. The DTCC is expected next year replatform its 11 trillion dollars of Trade Information Warehouse (TIW) use the authorized Axcore blockchain, a fork of the public ethereum blockchain.
The complicated relationship of the DTCC with the blockchain reflects the interest and concerns of the financial industry on a larger scale, according to Sharf. To further demonstrate the point, yesterday Kenneth Rogoff, former chief economist at the International Monetary Fund put on guard that investing in cryptocurrency was like buying "lottery tickets that pay in a dystopian future where they are used in rogue and failed states".
For his part, Scharf added: "The increased concern about the impact of fintech on systemic risk demonstrates a growing awareness of potential risk and underlines the need to assess both the risks and benefits associated with the fintech initiatives. ".
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Stephen Scharf, the head of security at DTCC, warns against the potential systemic risk of blockchain and more.DTCC
The Depository Trust and Clearing Corporation today identified the blockchain as a potential threat to global financial infrastructure, in its annual survey of the systemic risk of the barometer.
Among a number of potential threats identified by respondents from the financial services industry survey, blockchain, the first popular bitcoin technology, is listed as part of the broader fintech category.
The most interesting thing about the results, however, is that, just as the DTCC security chief has elaborated concerns about the blockchain, the securities giant, which annually delivers $ 1.6 trillion in securities, prepares to launch its own blockchain solution.
"DTCC embraces the promise that fintech innovations will further mitigate risk and reduce post-trade costs," said Stephen Scharf, chief security officer at DTCC, in a statement. "But as the industry continues to adopt fintech innovations, such as blockchain, AI and cloud solutions, we must ensure that these innovations do not jeopardize the security and security of the current global financial market."
One fifth of all respondents identified the broadest category of fintech as a potential systemic risk in 2019, with an increase of 5% over the previous year. Respondents were asked to identify the top five systemic risks they saw for the broader economy.
Blockchain was first used by bitcoins in 2009 to transfer value all over the world without the need for banks. While the cryptocurrency industry is currently in trouble, losing 80% of its value in the last year, the blockchain continues to be explored by JP Morgan, Northern Trust and a number of other companies financial.
The list of this year's systemic risks was outweighed by cybernetic risk, with 69% of respondents choosing it as a concern; geopolitical risks and commercial tensions, cited by 55% of respondents; Exit of Great Britain from the European Union (Brexit), cited by 49% of respondents; and an excessive global debt and the impact of new regulations, cited by 28% of respondents.
Although Scharf has warned of the potential negative impact of blockchain, which by its nature was designed to allow users to shift value without central authorities such as DTCC, the clearing giant is in the final stages of its blockchain project. Next year, the DTCC should relocate its $ 11 trillion of Trade Information Warehouse (TIW) using the authorized Axcore blockchain, a fork of the public ethereum blockchain.
The complicated relationship of the DTCC with the blockchain reflects the interest and concerns of the financial industry on a larger scale, according to Sharf. To further prove the point, yesterday Kenneth Rogoff, former chief economist at the International Monetary Fund, warned that investing in cryptocurrency was like buying "lottery tickets that pay in a dystopian future where they are used in rogue and failed states".
For his part, Scharf added: "The increased concern about the impact of fintech on systemic risk demonstrates a growing awareness of potential risk and underlines the need to assess both the risks and benefits associated with the fintech initiatives. ".
