Bitcoin Startup Gets Big-Bank Backing
22 January 2016 - 1:28PM
Dow Jones News
By Telis Demos
The decentralized ledger system used to record transactions for
the digital currency bitcoin has received an endorsement by a group
of the world's biggest banks and stock exchanges.
Digital Asset Holdings LLC, a startup trying to develop
mainstream uses for blockchain technology and led by star banker
Blythe Masters, has raised more than $50 million from 13 investors
including J.P. Morgan Chase & Co., Citigroup Inc., BNP Paribas
SA, CME Group Inc. and Accenture PLC, the company said.
The round was the first major external fundraising for Digital
Asset, which is now one of the best-funded startups seeking to
apply the blockchain process to Wall Street. Ms. Masters was
formerly the global head of commodities at J.P. Morgan, among other
senior roles.
The company may announce more funding from additional banks in
the coming weeks, people familiar with the talks said.
Digital Asset will work with its investors to continue to
research and commercialize platforms known as distributed
ledgers--networks in which each participant can update a shared
list of transactions--for use in deals involving stocks,
derivatives, loans and other assets. Currently, those transactions
have to be recorded centrally by banks or other institutions
charged with that responsibility, a duplicative process that adds
cost and time.
ASX Ltd., operator of Australia's largest stock exchange, said
Thursday it had chosen to hire Digital Asset to develop a
distributed ledger for clearing and settling stock trades.
"There has been a great deal of discussion about the potential
benefits of utilizing distributed ledger technology, but less in
the way of real-world deployment," Ms. Masters said in an
interview. "This business partnership with ASX is the first example
of a large-scale, real-world deployment of such technology."
Though blockchain-based platforms are still in their infancy,
banks think there is potential for big cost savings over current
mechanisms, some of which were originally developed in the
1970s.
Analysts at Autonomous Research estimate that within five years,
blockchain could theoretically cut $16 billion from the $54 billion
spent globally on clearing and settlement of trades.
Participants in the fundraising also included Deutsche Börse AG
and Depository Trust & Clearing Corp., which operate clearing
and settlement mechanisms. Michael Bodson, chief executive of DTCC,
joined Digital Asset's board, along with representatives from BNP
Paribas, J.P. Morgan and Deutsche Börse.
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
January 21, 2016 21:13 ET (02:13 GMT)
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