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By Anna Irrera and John McCrank
Reuters has found several blockchain projects launched bymajor financial institutions that have been shelved, asdevelopment of the technology enters a hype-meets-reality phase.
The casualties include projects by the Depository Trust &Clearing Corporation (DTCC), BNP Paribas SA and SIXGroup, Reuters has found.
These were among the wave of blockchain tests touted by thefinancial industry over the past few years, as firms bet the newtechnology would displace much of the sector's infrastructure,cutting out middlemen, speeding transactions and reducing costsfor things like securities and payments processing.
Yet as some projects were developed, companies pulled backfor various reasons - from costs to industry readiness,underscoring that, for all its potential, blockchain is still inits early days.
DTCC, known as Wall Street's bookkeeper, recently put thebrakes on a blockchain system for the clearing and settlement ofrepurchase, or repo, agreement transactions, said MurrayPozmanter, head of clearing agency services at the DTCC.
The project, which had successfully tested with startupDigital Asset Holdings (DA), was shelved because banks and otherpotential users believed the same results could be achieved morecheaply using current technology, he said.
"Basically, it became a solution in search of a problem," hesaid.
Post-trade services provider, SIX Securities Services, aunit of the group that operates
"We wanted to go into another direction," Schneider said.
The partnership with DA, run by former JPMorgan Chase & Coexecutive Blythe Masters, was announced in 2016.
French bank BNP Paribas in 2016 said its securities servicesdivision had partnered with startups including SmartAngels tobuild a platform for private small businesses to manage theirsecurities.
The bank stopped work on the project, and will instead teamup with other financial institutions on another blockchaininitiative called LiquidShare, said a source familiar with thematter. "Creating an enterprise-wide robust blockchain platformrequires the full cooperation of the whole post tradeecosystem," the source said.
PROOFS OF CONCEPT
The DTCC, BNP Paribas and SIX tests were among a barrage ofblockchain "proofs of concept" announced with great fanfare byfinancial institutions.
"A large part of the problem has been expectationmanagement, or rather lack thereof by many vendors and largeconsultancies that made claims that could not be fulfilled inthe time spans they had said on stage at fintech events," saidTim Swanson, founder of technology advisory Post Oak Labs.
Reuters reported last week JPMorgan was considering spinningoff its marquee blockchain project Quorum. In Julya partnership between settlement provider Euroclear and startupPaxos to develop a blockchain service was dissolved.
Still, other projects are moving forward.
Pozmanter said the DTCC is still examining another projectwith DA and that it is close to testing a blockchain-based tradeinformation warehouse set to launch next year.
"We're still bullish on the technology," Pozmanter said.
The repo test with DA "met all its stated goals" and led toa new project that DTCC is examining, said DA spokeswoman VeraNewhouse.
SIX is working on a blockchain project with Nasdaqand
