Slowly but surely, the blockchain technology that many thought was just trendy is now sparking major investments from Wall Street. Just yesterday (Sept. 9), it was announced that a group of major financial companies have agreed to invest $30 million in Chain, a San Francisco-based provider of blockchain technology solutions to financial institutions.
As seems to be all the rage today in FinTech innovation, Chain works with banks and financial institutions to determine how the blockchain technology can be harnessed in a way that can make it faster and easier to trade and transfer financial assets. The investors of the latest round include Visa, Nasdaq, Citi Ventures, Capital One, Fiserv and Orange SA. Beyond major investors, Chain announced that RRE Ventures Founder Jim Robinson III, the former American Express CEO, has joined Chain's board.
Existing Chain investors Khosla Ventures, RRE Ventures, Thrive Capital and SV Angel also participated and were joined by former Bank of America CEO David Coulter, X Prize Foundation CEO Peter Diamandis and MongoDB Cofounder Kevin Ryan.
Chain’s newest partners will also be involved in helping create a Blockchain Working Group in an effort to explore the technology and test it in various markets in order to determine how the technology should be approached.
"Technology relationships and investments, such as Chain, allow Visa to evaluate new technology that has the potential to deliver new payment innovation and support clients’ needs. Chain has built a platform that makes rapid prototyping easier, and the company is focused on finding practical enterprise applications of blockchain technology — a goal that we share in our evaluation of the technology," Jim McCarthy, executive VP of innovation and strategic partnerships at Visa, told PYMNTS.
"We are looking forward to working more closely with Chain and the other financial companies investing in Chain — Capital One, Citi, Fiserv and Orange — to collaborate on what’s possible together with this exciting new technology."
While there's been plenty of resistance on Wall Street to the financial tech that underlines the blockchain that's created buzz in the digital currency community, the concept of the actual currency associated with it (i.e., bitcoin) has slowly been tossed to the back of the conversation. Instead, the investors are eyeing the blockchain technology (the distribution ledger that records a bitcoin transaction over the exchange network) as a way to transform the financial sector and make transactions more secure and faster.
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The blockchain supporters have voiced that this technology could change the way stocks and assets are traded into new owner's hands, eliminating the extra days that are currently built into the financial process. But that doesn't mean the blockchain will be used by Wall Street anytime soon as the regulations behind making such a change will take some time to make it through protocols.
“A blockchain is more than a financial technology — it’s a strategy,” said Adam Ludwin, Chain’s CEO. “Applied intelligently, blockchain networks fundamentally improve how assets move between parties, and we are thrilled to be partnering with the organizations we believe are best positioned to capitalize on the inevitable changes in market structure that are on the horizon.”
Chain launched just a year ago, but it's already gained backing from several major financial institutions.
“Blockchain technology represents a fundamental, generational shift for financial services, and Chain’s platform is enabling and accelerating this transformation,” said Ramneek Gupta, managing director and co-head of global venture investing at Citi Ventures. “We hope to leverage Chain’s platform to rapidly test and develop applications as part of Citi’s multi-faceted blockchain strategy, which has the potential to greatly enhance our customers’ experience well beyond just currencies and payments.”
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Nasdaq also provided comments on why they are backing Chain.
“Chain is collaborating closely with us to increase efficiency in the capital markets,” said Brad Peterson, chief information officer at Nasdaq. “We see their platform helping us accelerate our time-to-market across our various blockchain initiatives. We are excited to further our partnership with them through Nasdaq’s investment in the company.”
Chain's business model is centered on working with FIs to design, deploy and operate blockchain networks that are tailored for markets and assets. And according to Chain: "These private networks, which typically do not use bitcoin currency but are based on the same open protocols, can be interoperable with one another and other open digital currency networks."
That same sentiment was expressed by Fiserv's top executive.
“Blockchain technology presents a new opportunity to enhance the financial services experience,” said Fiserv CEO Jeff Yabuki. “Our investment in Chain reflects our commitment to innovation in financial services, and we look forward to working collaboratively with the Chain management team to drive this important technology forward.”