If you have been wondering what kinds of applications there might be for Bitcoin on Wall Street, apart from settlement work, a new idea has been just highlighted. In an article on the Wall Street Journal website, we read:
Depository Trust & Clearing Corp., a firm at the center of Wall Street’s trading infrastructure, is about to give the technology behind bitcoin a big test: seeing whether it can be used to bolster the $2.6 trillion repo market.
DTCC said in a statement Tuesday that it will begin testing an application of blockchain, the digital ledger originally used to track ownership and payments of the cryptocurrency bitcoin, to help smooth over problems in the crucial but increasingly illiquid corner of short-term lending markets known as repurchase agreements, or “repos.”
Repos play a critical role in the financial system by keeping cash and securities circulating among hedge funds, investment banks and other financial firms.
Murray Pozmanter, managing director and head of clearing services at DTCC, said in an interview the new arrangement with Digital Asset should help because the ledger would provide a way for all firms to agree on trade terms more quickly.
If anybody has doubted the validity of using the blockchain in financial services, a real-life test is now a lot closer than a couple months ago. It turns out that financial institutions are not only interested in using Bitcoin as a means to confirm the ownership of assets but rather they are able to find other potential niches for blockchains.
These are early days for Bitcoin and even earlier ones for Wall Street in terms of Bitcoin involvement. Large banks and other firms have already started dabbling in Bitcoin but the process is far from established. Startups are currently working on other solutions and trying to figure out additional ways to use the blockchain concept in finance. It is completely possible that we’ll see a lot more development in this space and other ideas contributing to smoother operations, perhaps even in the OTC market.
For now, let’s focus on the charts.