As the adoption of blockchain in the mainstream financial settlement is increasing, Zürcher Kantonalbank (ZKB) and Deutsche Börse’s Clearstream have processed their first live blockchain-based end-to-end fund transactions.
According to Tuesday’s announcement, the companies used FundsDLT decentralized platform for the transaction.
Based on Ethereum, FundsDLT reengineered the fund distribution value chain, from front to back, covering the entire fund lifecycle. Clearstream became a stakeholder in the project last year along with Credit Suisse.
More and More Blockchain Adoption
Blockchain technology overall is seen as a gamechanger for the financial industry with many advantages over the existing centralized infrastructure. For instance, the transaction processing time from the existing few hours can be trimmed down to a few minutes or even seconds. The consensus-based technology can further add another security layer to the transactions.
For the transaction between ZKB and Clearstream, the distribution of the investment fund took place between Switzerland and Luxembourg. The order was captured and delivered to Clearstream’s fund processing platform Vestima via the blockchain.
Commenting on the use of new technology, ZKB’s Head of Digital Asset Solutions, Peter Hubli said: “The proof of value allowed us to have a sneak peek into the future of the fund industry, its potential and impact not only for ZKB, but also for our clients and partners. By leveraging blockchain technology, we get both an overview of the entire flow of assets and money and can also identify and understand investor’s needs.”
“It is important that our customers can leverage the advantages of blockchain starting today, with access to a large investment funds portfolio via proven, regulation-compliant and safe fund processing environments,” Bernard Tancré, Head of Investment Fund Services Products at Clearstream, said.
“This initiative significantly increases operational efficiency for investors, distributors and transfer agents, and we are only at the beginning of this most promising journey.”
Other mainstream financial companies are also adopting blockchain for their services. Most recently, the German housing firm, Vonovia issued €20 million worth of bonds on Stellar blockchain.