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T E C H N O L O G Y
the European Union (EU), which in itself
is in the process of passing the General
Data Protection Regulation (GDPR). In
response, any emerging market adopt-
ing blockchain will have to ensure the
technology is secure and subject to robust
regulatory oversight.
Re-shaping the industry
As such, blockchain is going to have to
ensure its security is future-proofed, with
a number of experts raising the possibility
that its encryption could eventually be vul-
nerable to attacks launched off quantum
computers in due course. “Quantum com-
puters in theory could be many multiples
of millions of times faster than our existing
computers, and will be able to solve some
of the most complex equations. They could
potentially solve the cryptographic equa-
tions typically used on the blockchain to
protect sensitive data,” said John O’Hara,
CEO and co-founder of Taskize, speaking
at SIBOS last month in Toronto.
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Global Custodian
Spring 2018
I N N O V AT I O N ]
Some believe the risks associated with
blockchain are overstated, arguing that
nearly every technology or system up-
grade that has ever been undertaken by
a bank carries with it some challenges.
“Changing technology always carries risk
whether it is blockchain or not. Block-
chain obviously does not eliminate every
risk and with every new technology, new
risks are introduced,” adds King. “Howev-
er, the clear ability for blockchain to pro-
vide a far less risky investor environment,
coupled with lower costs and greater op-
erational efficiency, suggests the potential
rewards far outweigh the perceived risks.
Nonetheless, we are still at a very early
stage and it is incumbent on the pioneers
to take responsible steps ahead of the
technology’s widespread adoption.”
But is the entire debate about block-
chain in emerging markets similar to the
arguments the industry had two decades
ago around dematerialisation of physical
share certificates? Singer, who spear-
“Blockchain will satisfy many
of the underlying principles
for financial market
infrastructures put forward
by bodies like CPSS IOSCO.”
MONICA SINGER, CONSENSYS, AND
FORMER CEO, STRATE
headed South Africa’s dematerialisation
efforts, acknowledged there were clear
parallels between the two. “Global mar-
kets got very scared that South Africa was
doing something truly radical in the late
1990s with dematerialisation of physical
share certificates. A lot of the brokers
and custodians in London, for example,
were warning us not to run before we
could walk,” said Singer. Those emerging
markets with very little to lose have a
once-in-a-lifetime opportunity to reshape
the securities services industry.