WordPress tag format: 「blockchain」「finance」「ripple」
Xinhua recently published an article about the Hong Kong Securities and Futures Commission (SFC) partnering up with 11 banks to build a blockchain-based platform to combat financial crime. The platform, Distributed Economy and Exploration for Embracing Legitimate Industries (DEEP) Fintech Lab, is expected to launch in June this year.
According to Xinhua, DEEP Lab was established in early 2018, and there has been 11 banks involved including Bank of America Merrill Lynch, HSBC, Standard Chartered, and UBS. The SFC has stated that the plan is to create a “closed-loop” system for the sharing and analysis of suspicious activities. The SFC’s director of fintech, Kenneth Lam Kin-leung, commented that “By introducing the new technology to the securities and futures industry through the Fintech Lab, we will increase the overall efficiency of the existing surveillance system and enhance its ability to process, analyze and verify data.”
DEEP Lab’s focus extends to fintech applications, with specific attention given to initial coin offerings (ICOs) public fundraising, and other financial schemes. Additionally, the platform will put forward blockchain standards, best practices, and regulatory guidelines.
The SFC’s involvement in a blockchain-based initiative and partnership with notable banks across the world is a significant move, with potential for the development of the regtech and regfintech sectors. In this context, it echoes the sentiment put forth by SFC chairman Carlson Tong Ka-shun that a “collaborative” approach is required for the proper use of fintech and the development of relevant standards, especially with respect to AFICs.
The development of an open solution along with regulatory guidelines behind it could create regulatory clarity on the blockchain application in financial markets and drive adoption for those taking part. The launch of DEEP Lab will provide a testing ground for blockchain’s benefits in improving regulatory efficiency and effectiveness, a prospect that will no doubt be attractive to banks who stand to benefit the most from the proposed standards, best practices, and regulatory guidelines.
It is interesting to note that Xinhua specified Ripple as one of the players to contribute to the lab’s initiatives – it could be a strong indication on the DEEP Lab’s preference for distributed ledger technology powered by consensus mechanisms, rather than both proof-of-work and proof-of-stake. Additionally, Ripple’s partnerships with banks could also put it in a favorable position for serving as a preferred fintech solutions provider in view of its fintech assets including enterprise solutions, developer platform, and a Xpring (formerly known as Open Coinvention) initiative.
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