London Stock Exchange Plans Blockchain-Based Trading Business

The London Stock Exchange (LSE) is reportedly planning to launch a blockchain-based digital markets business.

Officials at the exchange said this will make LSE the first major exchange offering blockchain-based trading of traditional financial assets, the Financial Times (FT) reported Monday (Sept. 4).

Murray Roos, the LSE’s head of capital markets, said in the report the company is “definitely not building anything around cryptoassets” but hopes to use the technology that backs tokens like bitcoin to allow for more efficient buying and selling of traditional assets.

“The idea is to use digital technology to make a process that is slicker, smoother, cheaper and more transparent … and to have it regulated,” Roos said, per the report.

He added that LSE waited to move forward until it was certain that investors were prepared and that public blockchain technology was “good enough.”

The LSE’s move is happening at a time when many traditional financial institutions are exploring the potential of blockchain to streamline asset trading and issuing, the report said.

“The true intrinsic value of blockchain, which is around programmability of transactions, immutability of transactions, and the ability to do delivery versus payment and always-on types of payments, has yet to be unlocked,” Mastercard Chief Digital Officer Jorn Lambert told PYMNTS in a July interview.

“Until there exists the ability to actually develop financially-regulated applications on the blockchain, the benefits will never go mainstream,” Lambert explained. “Regulated financial institutions are crucial for [tokenized blockchain money movement vehicles] to truly scale.”

Blockchain has become somewhat of a dirty word in the wake of the crypto industry’s tumultuous 2022. Still, many observers insist that digital assets and blockchain technologies are on course to becoming critical infrastructure for storing and moving value.

“The world’s economy today is powered by the balance sheet of the banks, by commercial bank money,” Lambert said.

He added that for blockchain-based money movement to have a meaningful impact, “commercial bank money” needs to be introduced to the blockchain in a way that is trusted, secure and scalable — what he referred to as “tokenized deposits.”

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