Could Blockchain Capital Market Adoption Come Soon?

Blockchain’s ability to disrupt the financial world may be coming sooner rather than later.

At least that’s the case if a report from TABB Research comes to fruition. New research from the firm suggests that blockchain adoption by capital markets is no longer a hypothetical. Instead, it’s a matter of when it will happen. That’s the focus of its new research titled: “Blockchain Technology: Pushing the Envelope In FinTech.”

By adopting the blockchain’s distributed ledger technology, the capital market ecosystem has the potential to open new markets to generate revenue boosters, the research suggests.

Shagun Bali, the TABB research analyst who wrote the report, said that the blockchain is a highly scalable, secure technology that can change how electronic transactions in capital markets are tracked, cleared and settled.

“The blockchain landscape and evolving ecosystem present a unique opportunity and a fundamental foundational element for additional innovation in financial markets,” Bali said. “However, further due diligence for defining industry standards with regards to settlement, counterpart and other transactional risks involved are critical. As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead.”

Bali calls for the adoption of the technology to occur over the next 12-24 months, and said that blockchain solutions should be seen coming into the market for syndicated loans as soon as Q2 of next year. For equity clearing, however, she projects that’s still a decade away.

“Within capital markets, a number of top use cases are coming to the fore, opening new opportunities for efficiency and generating revenue from greenfield projects, including private equity, interbank payments and corporate debt, among others,” she wrote in the report.

Bali’s report details blockchain’s technology, its best use cases and banks who have announced interest in the technology — as well as six blockchain startups that are playing a role in the shift (Symbiont, R3, Chain, Ripple, Digital Asset and Hedgy).

In 2015 alone, TABB Group’s research reported $66.8 million in new investments in blockchain-related FinTech firms, which surpasses the $51.2 million raised in all of 2013 and 2014. And as more focus gets put on the blockchain component, that means more in the industry are talking about the technology behind its role in bitcoin transfers.

TABB’s research indicates that beyond bitcoin, blockchain itself has the potential to be a “critical backbone of the future capital markets infrastructure systems.”

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