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Blockchain technology can serve the entire financial market. Digitization on top of blockchain will mean transactions that are settled immediately, that remove third parties, and that are faster and cheaper.
An antiquated financial system
According to Emanuele Francioni, founder of Dusk Network, our current financial system is sorely in need of innovations that can cut out the inefficiencies of third parties. He states:
"Often multiple intermediaries are needed to process something administratively. A good example is keeping records of shareholder registers. With every trade you have to go to a notary who, after everything has been passed, manually updates the shareholder register. A time-consuming job and on top of that you pay a lot of money for it.
The administration at large custody companies may go digital, but even here the processes are often needlessly complex and dependent on multiple intermediaries who have to keep and submit their own records. For example, it can take up to two days for a transaction on a trading platform to be processed in all administrations."
For Francioni, these are problems that can be solved by digitizing them on top of blockchain. He affirms:
“You can process transactions on a blockchain in real time, and on our blockchain these transactions are also immediately final. You thereby remove a lot of administrative hassle and you take out all kinds of parties. It becomes faster, cheaper and often safer.”
Blockchain provides truth
With record keeping in the financial system there are times when certain records just don’t match up. With various intermediaries involved in any one process there is always room for one or more to have a different total to the others.
With blockchain this is never the case. There is always a clear overview of who owns what, and this provides simplicity to any business process. However, the transparency of the blockchain can cause problems of its own, especially in regulated markets.
This is where Dusk Network comes in. The Dusk Network blockchain is tailored in such a way that all the transactions and the personal data that goes with it can be verified with official agencies, but all this data is completely protected and anonymized from those a user transacts with.
It means that a user can transact in full safety while institutions know that their regulatory obligations are being fully complied with. The Dusk Network smart contracts also prevent any user or institution from any erroneous transactions that might break compliance.
European regulations incoming
With the incoming Markets in Crypto Assets regulation (MiCA) it is becoming clear that Europe does want to support the shift towards blockchain. The MiCA initiative defines how digital transactions on a blockchain must comply.
A pilot scheme beginning in 2023 will allow for large regulated trading platforms and custody companies to adopt blockchain technology for full tokenization. Francioni says of the scheme:
“The scheme will allow these parties to apply for an exemption from a good number of 'restrictive' obligations. A huge boost for blockchain adoption in the industry, as they can immediately enjoy the benefits in their own systems."
"We believe the world is currently in a transition phase to a fully digitized economy. That transition is now also being reinforced from Europe. I am proud that we play a fundamental role in this and can help our clients take the first step."
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.