Blockchain Catch-upThis is Charles Brett’s start-of-the-week Enterprise Times ‘blockchain catch-up’ Week 8. Necessarily it is idiosyncratic and selective.

It is not intended to be comprehensive but does seek to highlight ‘Quick Takes’ on specific developments as well interesting pieces to read, a listing of some (not all) announcements/press releases and pointers to upcoming events.

Quick Takes – Charles Brett’s Blockchain Catch-up Week

VersaBank to launch VCAD, a bank-issued, deposit-based digital currency

VersaBank is a North American provider of B2B digital banking and technology solutions for cybersecurity. It has announced plans to launch a strong encryption-based digital currency (cryptocurrency) represented one-to-one by a Canadian dollar bank deposit with the Bank – so-called VCAD. VersaBank expects VCAD to:

  • be the first digital currency to represent a fiat currency
  • be a world digital currency issued by and backed by deposits with a North American bank
  • use smart contracts, as a highly encrypted iteration of the Bank’s existing digital deposit contracts.

To accomplish this, VersaBank is partnering with Stablecorp, a joint venture between Canada’s 3iQ (an asset manager) and Mavennet (a blockchain developer) to launch VCAD. VCAD will have as its base:

  • VersaBank’s proprietary banking software
  • the issuance of the digital currency issuance managed via VersaVault.

Quick Take: VersaBank says it is targeting public availability of VCAD “in the coming months”. This is pretty vague (think Libra and others). Even so, VCAD could provide consumers with not only the security afforded by an underlying deposit offered via a Canadian chartered bank but also the comfort of knowing that each VCAD issued (or redeemed) will match one-to-one with the C$. The bank also says: “We are highly confident in the demand for VCAD as digital currencies increasingly become part of mainstream financial transactions.”

David Taylor, President of both VersaBank and its cybersecurity subsidiary, DRT Cyber: “Consumers and businesses purchasing products and services with VCAD will finally know the precise value of their digital currency when executing these transactions.”

DTCC white paper – advancing to T+1 

The DTCC’s white paper, Advancing Together: Leading the Industry to Accelerated Settlement, outlines a roadmap for shortening the equities settlement in the US to one business day after trade execution (so-called T+1). The immediate benefits of moving to T+1 are, potentially, cost savings, reduced market risk and lower margin requirements. For example, a daily average of over $13B is held today on margin to manage counterparty default risk in the system.

DTCC kicked off Project Ion as a proof of concept testbed for functional and technical innovations that might go into the DTCC’s clearance and settlement platforms. Project Ion explores:

  • how distributed ledger technology (DLT or blockchain) could open up a reimagining of post-trade processing
  • the concept of an alternative settlement system underpinned by digitalisation of DTC-eligible securities
  • being able to offer multiple process improvements for clients while retaining the advantages of central netting.

Quick Take: that a financial services clearing body is now seeing many advantages, for itself and its clients, if blockchain becomes part of the settlement process, is a big step forward. Moving to T+3 was an advance. To T+1, if it happens, will be as significant.

For those ‘anticipating’ a move to real-time settlement, Mike McClain (DTCC Managing Director and General Manager of Equity Clearing and DTC Settlement Services) has cautionary words. “Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume.”

7 pieces to read – Charles Brett’s Blockchain Catch-up Week 8

Selected announcements/press releases – Charles Brett’s Blockchain Catch-up Week 8

  • Chainstack research that looks at development data on Eth2 clients (report)
  • Tendermint announces investment in Tgrade to bolster Cosmos’ DeFi ecosystem (news blog)
  • Standard Bank Group establishes Africa’s first Hedera network node to enable much-needed digitisation of cross-border trade processes (press release)
  • The first of Manhattan crypto fraud cases gets axed (Reuters – behind paywall)
  • Vinergy expands investment policy to include Bitcoin, digital currency and blockchain investments (press release)
  • Blockchain App Factory becomes an entrepreneur’s choice of investment by developing its DeFi exchange platform (press release).

Selected upcoming events

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