Crossing the chasm: Why post-trade FMIs are the key to scaling blockchain adoption

Abstract

There is a growing industry consensus that blockchain presents an exciting insight into the future of next-generation operational technology. As blockchain brings a new way of organising the underlying ledgers and communication, often we see industry leaders launching an on-chain version of their core business and operating both in parallel, such as J. P. Morgan’s Onyx and Euroclear’s D-FMI. Therefore, the question on the minds of many is what mass adoption would look like, as participants balance the needs of modernising existing systems versus migrating to new ones. This paper seeks to unwrap the key challenges and delve deeper into this multifaceted technology, to show that a trusted bridging solution that has footing in both traditional and new ecosystems is instrumental to enable the industry to move towards adoption and convergence. The author argues that post-trade financial market infrastructures (FMIs) have a key role to play in helping industry participants amplify the benefits of adoption, while crossing the various associated chasms of costs, scalability, risks and uncertainty.