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Given that we are now entering another crypto hype cycle and blockchain technology, discussions often veer towards crypto and the allure of embedded tokens. I’m

Given that we are now entering another crypto hype cycle and blockchain technology, discussions often veer towards crypto and the allure of embedded tokens. I’m going to stick to the realty and opportunity: utilizing blockchain in fixed income finance. Having spent two decades navigating the complexities of Wall Street, I know the critical problem plaguing the fixed income market: the overwhelming amount of data generated during the origination of debt instruments and the subsequent challenges in reconciliation during clearing and settlement. Night cycles, calling Bloomberg to fix security master. Calling DTCC to settle trades. Blockchain is the best technology to solve this. Only if applied correctly. Otherwise, it’s a waste. We started with a fundamental goal: to debunk the myths and misconceptions surrounding blockchain in the securities space. Despite the pervasive FUD propagated by the media, we have now proved to regulators that securities originated on blockchain are indeed securities – not merely speculative digital assets. At its core, we are looking to address the root cause of friction in fixed income trading: the lack of direct origination and data quality across market participants. By leveraging a permissioned network, we have proved by recording of municipal loans and securities on our blockchain. While it may not be the flashy product that garners headlines, this milestone marks a significant step forward. We also trained all of FINRA’s fixed income examiners…. Our next step is to bring brokered CDs, directly to the investors, giving them access to negotiate with the issuers. From there the goal is to extend to real-time clearing and settlement, streamlining processes and enhancing efficiency across the fixed income ecosystem. Here's how a trade moves through our system in current state…it’s a mental journey. https://www.chicagofed.org/markets/view-lasalle-street/us-reg-authority https://www.chicagofed.org/markets/view-lasalle-street/us-re...

troupo 3y ago
> the root cause of friction in fixed income trading: the lack of direct origination and data quality across market participants. By leveraging a permissioned network, Blockchain has nothing to do with "data quality across market participants". Bad data entered into blockchain remains bad data.
- mand1575 3y ago
  hence origination - bad data can be fixed. try calling 30 different vendors and rely on downloading the file to run the M2M night-cycle
  - troupo 3y ago
    Basically, you're lacking a platform that brings all those things together. What blockchains may give you is a slow append-only log, which is a very minor part of that platform. And making everyone move to that platform is a much bigger challenge :)
    - mand1575 3y ago
      that's been the journey - but signed the biggest market and about to launch the brokered CD market Speed or throughput is not a challenge for origination - no one is mining a Bitcoin here!
pa7x1 3y ago
In case you are curious BlackRock launched last week a money market fund on Ethereum. You can see it onchain here: https://etherscan.io/token/0x7712c34205737192402172409a8f7ccef8aa2aec https://etherscan.io/token/0x7712c34205737192402172409a8f7cc... And here the press release: https://securitize.io/learn/press/blackrock-launches-first-tokenized-fund-buidl-on-the-ethereum-network https://securitize.io/learn/press/blackrock-launches-first-t...
- mand1575 3y ago
  Aware - and kudos to them for using Ethereum - It's a word play to confuse the market. Notice they don't say on Public Net. The installation is permissioned. I was involved with the first Yankee CD trade in 2018 with JPM. No investor can buy this without the KYC/AML checks, means if there's a wallet it's just a brokerage account - the underlying security is at a custodian not on-chain and the TA is still involved in registering the ownership of the share.
yieldcrv 3y ago
Great, yeah are you going to move off the permissions blockchain to just permissioned smart contracts on a public blockchain? Capital formation has been occurring this way for at least 12 years on public blockchains. Satoshidice was one of the first companies and its shareholders created a vibrant secondary market onchain. They did dividends daily and it always went out to every shareholder daily. What happens now is so much more advanced but even more frictionless for crypto native issuers and traders. One day DTCC and FINRA and the Fed will conform it to their redundant processes so that registered securities can do the same, using the same public utilities as everyone else.
- mand1575 3y ago
  >yeah are you going to move off the permissions blockchain to just permissioned smart contracts on a public blockchain? Perhaps for clearing - ownership wise I think it stays permissioned - no investor wants to loose the wallet and not be able to recover their asset. >One day DTCC and FINRA and the Fed will conform it to their redundant processes so that registered securities can do the same, using the same public utilities as everyone else. 100% - that's the plan but it's a massive regulatory capture to fight. Akin to launching a rocket and you need DoD and hundred other permissions. One thing to keep in mind - Sec Act of 1933 and 1934 are here to stay - they may get new regs under them but ownership needs to be transferable outside just the normal case of trading i.e. trust, death, divorce, birth blah blah...
  - yieldcrv 3y ago
    smart contracts on public blockchains can handle all those custodial aspects the smart contracts can be permissioned and have multiple signers and beneficiaries and payable on death conditions, the oracles and admins can be multi signer accounts too I’m just trying to figure out what false dilemmas you are operating under, the examples already exist You’re the advocate, in your world, but seemingly stuck in their myriad of concerns that are based on incomplete information reminds me of how the substitute meat is repulsive to omnivores and vegans alike. hyperledger vibes
    - 3y ago
hdusa952 3y ago
Could the brokered CDs be a retail purchase?
- mand1575 3y ago
  Definitely - I see no reason why the retail can't negotiate the best rate with the banks directly.

troupo 3y ago

> the root cause of friction in fixed income trading: the lack of direct origination and data quality across market participants. By leveraging a permissioned network, Blockchain has nothing to do with "data quality across market participants". Bad data entered into blockchain remains bad data.

mand1575 3y ago
hence origination - bad data can be fixed. try calling 30 different vendors and rely on downloading the file to run the M2M night-cycle
- troupo 3y ago
  Basically, you're lacking a platform that brings all those things together. What blockchains may give you is a slow append-only log, which is a very minor part of that platform. And making everyone move to that platform is a much bigger challenge :)
  - mand1575 3y ago
    that's been the journey - but signed the biggest market and about to launch the brokered CD market Speed or throughput is not a challenge for origination - no one is mining a Bitcoin here!

pa7x1 3y ago

In case you are curious BlackRock launched last week a money market fund on Ethereum. You can see it onchain here: https://etherscan.io/token/0x7712c34205737192402172409a8f7ccef8aa2aec https://etherscan.io/token/0x7712c34205737192402172409a8f7cc... And here the press release: https://securitize.io/learn/press/blackrock-launches-first-tokenized-fund-buidl-on-the-ethereum-network https://securitize.io/learn/press/blackrock-launches-first-t...

mand1575 3y ago
Aware - and kudos to them for using Ethereum - It's a word play to confuse the market. Notice they don't say on Public Net. The installation is permissioned. I was involved with the first Yankee CD trade in 2018 with JPM. No investor can buy this without the KYC/AML checks, means if there's a wallet it's just a brokerage account - the underlying security is at a custodian not on-chain and the TA is still involved in registering the ownership of the share.

yieldcrv 3y ago

Great, yeah are you going to move off the permissions blockchain to just permissioned smart contracts on a public blockchain? Capital formation has been occurring this way for at least 12 years on public blockchains. Satoshidice was one of the first companies and its shareholders created a vibrant secondary market onchain. They did dividends daily and it always went out to every shareholder daily. What happens now is so much more advanced but even more frictionless for crypto native issuers and traders. One day DTCC and FINRA and the Fed will conform it to their redundant processes so that registered securities can do the same, using the same public utilities as everyone else.

mand1575 3y ago
>yeah are you going to move off the permissions blockchain to just permissioned smart contracts on a public blockchain? Perhaps for clearing - ownership wise I think it stays permissioned - no investor wants to loose the wallet and not be able to recover their asset. >One day DTCC and FINRA and the Fed will conform it to their redundant processes so that registered securities can do the same, using the same public utilities as everyone else. 100% - that's the plan but it's a massive regulatory capture to fight. Akin to launching a rocket and you need DoD and hundred other permissions. One thing to keep in mind - Sec Act of 1933 and 1934 are here to stay - they may get new regs under them but ownership needs to be transferable outside just the normal case of trading i.e. trust, death, divorce, birth blah blah...
- yieldcrv 3y ago
  smart contracts on public blockchains can handle all those custodial aspects the smart contracts can be permissioned and have multiple signers and beneficiaries and payable on death conditions, the oracles and admins can be multi signer accounts too I’m just trying to figure out what false dilemmas you are operating under, the examples already exist You’re the advocate, in your world, but seemingly stuck in their myriad of concerns that are based on incomplete information reminds me of how the substitute meat is repulsive to omnivores and vegans alike. hyperledger vibes
  - 3y ago

hdusa952 3y ago

Could the brokered CDs be a retail purchase?

mand1575 3y ago
Definitely - I see no reason why the retail can't negotiate the best rate with the banks directly.