Deutsche Börse, a marketplace organizer for the trading of shares, has launched what they have called a “DLT, Crypto Assets, and New Market Structures” department at their firm. The purpose of this new department is to explore blockchain technology , its application, and cryptocurrency markets.
Deutsche Börse, based in Germany, is a marketplace organizer with a revenue stream of 2.3 billion euros as of 2015. The total value of the over 700+ companies listed with them have a total market capitalization of well over 1.4 trillion euros. Functioning much like a stock exchange, Deutsche Börse ultimately is the bridge between investors and companies wishing to invest in global capital markets. The formation of this new department at Deutsche Börse indicates a rising acceptance of cryptocurrency markets and blockchain’s applicability in the greater financial world.
As per the firm’s press release, this is not the first time the firm has been exploring blockchain technology: it has in fact been doing so for some time. However, now the exchange has been working alongside international central securities depositories on utilizing smart contracts for financial assets and their contractual agreements. For example, they had been in the works creating a functional prototype of a blockchain-based settlement with Deutsche Bundesbank for securities.
Jens Hachmeister, their managing director, has said that this is just the “first phase” and naturally it involves much experimentation. He added that “we invested in various initiatives to create a sound understanding of the trends, the technology, and its potential.”
The move has been expected for some time now. For example, in March Deutsche Börse formed a partnership with HQLAx. The collaboration was steered towards testing blockchain technology and its use-case with security lending transactions. Ultimately, their long-term goal is to bring blockchain-based technology into the trade arena. Then. they hope to standardize this practice and create a blockchain-based marketplace. This, ultimately, is the long-term goals.
Ultimately, it’s a low-level risk for Deutsche Börse: the application of blockchain for contractual agreements is an aspect of the technology that is intuitive. Other financial firms have been exploring the use-cases of smart contracts as well, but the talk of “experimentation” still indicates that we are far too early to speculate on how it will play out. Regardless, the establishment of an entire new department to monitor blockchain technology and crypto-related assets indicates that, at the very least, the seriousness of these markets is recognized by more and more financial firms.