SWIFT and BlackRock Embrace Blockchain Tech

Beyond Blockchain #9: Blockchain adoption gathers pace as more heavyweights plug-in DLT solutions

The blockchain industry is growing at an exponential pace and startups are at the heart of cutting-edge blockchain-based solution development. The newly-released Global Startup Ecosystem Report highlighted that 10% of the world’s emerging startups are blockchain-based businesses.

Enterprises are steadily entering the blockchain space as well. This week’s Move Digital Beyond Blockchain release examines how blockchain solutions are being used to combat fraud in trade finance, educational certificates, insurance, and equity swaps. In addition, we look at how two heavyweight enterprises, SWIFT and Blackrock, are planning to use distributed ledger technologies (DLTs) to explore new business.

SWIFT to Trial Blockchain-Based Solution

In international trade, double issuance of invoices, warehouse receipts, and other documents is a common form of fraud. Enterprises are waking up to the blockchain’s potential to solve this problem. The global network for processing payments between countries, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) is participating in an international proof-of-concept (PoC) trial involving the use of blockchain.

SWIFT will use a blockchain-based anti-fraud solution developed by startup MonetaGo to reduce falsified transactions and establish trust between trade partners. MonetaGo’s solution logs these documents on a blockchain and stakeholders can easily review and confirm the validity of all transactions.

MonetaGo’s partnership with SWIFT will allow for the anti-fraud solution to be used internationally. This represents a more effective approach than trying to connect multiple domestic anti-fraud systems that are not as resilient as blockchain solutions.

BlackRock Joins DLT-based Equity Swaps Network

BlackRock, the world’s largest asset manager with over $9 trillion assets under management, has joined Veris, a DLT-based equity swaps platform. Veris was designed and launched in 2020 by capital markets technology firm Axoni. The platform’s other notable users include U.S. banks Citi and Goldman Sachs.

An equity swap is a derivative contract that allows involved parties to exchange one another’s future cash flows. The goal is to allow each partner to minimize cash flow risk for the duration of the deal in a way that best suits their operational needs.

Traditionally, swap counterparties electronically reconcile shared data such as cash flows, positions, and amendments at the conclusion of each trading period. However, these data are sensitive and a breach or unauthorized edit compromises trust in the system.

Veris allows trading parties to confirm equity swap trading terms and synchronize any changes throughout the deal’s lifecycle. The solution is ideal for Blackrock since security is guaranteed and participants minimize risks associated with trading these complex derivatives. Greater trust will also allow BlackRock to promote more sophisticated products to their customers and increase bottom lines.

Etherisc and German University to Launch Decentralized Insurance Solution

German-based blockchain startup Etherisc is partnering with a local university, Mittweida University of Applied Sciences, for a new blockchain-based project. The university’s blockchain research center, known as Blockchain Competence Center Mittweida (BCCM), will work with Etherisc to develop alternatives to traditional insurance policies.

The project will pioneer a decentralized autonomous organization (DAO) that will directly allow end users to define their insurance product and receive tailored coverage. Blockchain use allows for reduced administration costs, lower premiums, shorter claim periods for applicants. All of these are pain points that traditional insurers fail to address.

The decentralized insurance project is being reportedly funded by the German Federal Ministry of Education and Research. Etherisc also worked with ACRE Africa to provide micro insurance solutions to some 17,000 farmers in Kenya.

Malaysian Stock Exchange to Use Blockchain to Record Stock Certificates

Bursa Malaysia, Malaysia’s stock exchange, recently announced that it is developing a proof-of-concept (PoC) to use blockchain to record stock certificates. Bursa Malaysia will use DAML smart contracts, a blockchain development framework designed by startup Digital Assets, and a distributed ledger technology platform developed by VMWare.

The exchange will initially focus on using the DLT-based solution to dematerialize structured warrants and store them on the blockchain. Structured warrants are derivatives that are issued by investment banks and other third party firms. They behave like options, but allow counterparties to customize terms to a greater degree than vanilla options contracts.

They’re data sensitive because they track multiple variables that are a part of the warrant. These variables include a company’s stock price, an economic release, a company’s operating cash flows, and so on. Tracking them via traditional systems is risky because of the risk of data loss and other fat-finger errors.

According to Bursa Malaysia, storing these certificates on the blockchain will “improve the ease of doing business by reducing the reliance on manual work to create, manage and withdraw” them. Local financial institutions Macquarie Capital Securities (Malaysia) Sdn Bhd and Maybank Investment Bank Berhad will participate in the initial trial, with Bursa Malaysia open to expanding it to a wider user base if successful.

Indian Education Board Adopts Blockchain to Document Student Certificates

The Central Board of Secondary Education (CBSE) in India is planning to launch a new portal called Academic (BlockChain) Documents. This move is aimed at addressing the problem of widespread academic credential fraud that plagues the country. Applicants routinely falsify academic qualifications by presenting doctored certificates to employers and higher academic institutions.

The CBSE’s move ensures that future employers and other institutions can review applicants’ certificates securely during interview and vetting processes, without fear of fraud. The organization has already published blockchain-based certificates for Class 10 and Class 12 students who graduated between 2019 and 2021. Certificates from previous years are expected to be rolled out in the coming months.

Latest Blockchain Investments

EU to Invest $177 billion in Blockchain and Emerging Technologies: The European Union (EU) will sponsor the direct investment of at least $177 billion in emerging technologies including blockchain, artificial intelligence, quantum computing, data infrastructure, and 5G networks. The $177 billion fund represents more than 20% of the €750 billion (appr. $887 billion) that was earmarked by the region to stimulate the recovery of businesses in a post COVID-19 world.

Blockchain-based New Street Technologies Secures $4M Funding: India-based New Street technologies offers a blockchain-based solution that minimizes costs of microfinancing for companies in the banking, financial services and insurance (BFSI) industry. This week, the startup raised $4 million in a funding round led by a group of private investors including Vittal Kadapakkam of U.S.-based Juul Labs, Unitus Ventures, Indian Bankers, and Mohit Davar of Money Transfer Network. The startup plans to use these funds to expand into the U.S., Europe, and Africa.

Learn Where Blockchain Fits Into Your Business Model and Objectives

Move Digital is a trusted partner for enterprises looking to map out or deploy a blockchain strategy. Our team of experts will help you evaluate key operational areas where integrating a DLT-based solution can be an instant game-changer. If you need help getting started with blockchain in your organization, feel free to send us an email