Hybrid Finance & Corporate Finance News

Lundi 23 Novembre 2015

UBS Blockchain Partner Clearmatics Raises Funds for Digital Coin

Clearmatics Technologies Ltd., the company working with UBS Group AG on a blockchain-based digital coin to redesign the global payment system, completed its first round of funding.

Route 66 Ventures LLC, Tellurian Capital Management LLP and Nyca Partners are among the investors, said Robert Sams, founder and chief executive officer of London-based Clearmatics, said on Wednesday. The backing is the latest sign of interest in using blockchain, the software behind bitcoin, to make transferring and tracking the ownership of bonds, loans and other assets faster and cheaper and to minimize operational risks.

“Our investors understand the disruptive potential of Clearmatics’ solutions and are very actively helping us extend our relationships with key institutional players,” Sams said.

UBS engaged Clearmatics in September to demonstrate the feasibility of developing a digital coin based on blockchain to settle trades and make cross-border payments. The Swiss bank, the world’s biggest manager of money for the rich, wants to team up with other financial institutions and regulators to develop a product for the industry that would be backed by real-world currencies and central bank accounts.

Clearmatics, founded in February, has demonstrated the concept to other companies and it has been well-received, Sams said.

Potential Uses

Blockchain is an open-source software code that uses advanced encryption to record bitcoin transactions. Banks are seeking broader applications. Powered by a network of computers, it allows two parties to exchange information securely within minutes, with no need for a third party. At present, banks rely on workers to verify and process transactions, an expensive business that can take days.

UBS has identified 20 to 25 potential uses for blockchain, also known as distributed or decentralized ledger technology, said Oliver Bussmann, the Zurich-based bank’s chief technology officer.

Chris Murphy, global co-head of currencies, rates and credit at UBS, said blockchain represents a fundamental rethinking of the business

“Across the industry, there are billions of costs that could be at play here,’’ Murphy said in an interview in Zurich last month. He is eager to stay close to developments, he said.

Real-World Applications

UBS decided early on to abandon a purely in-house model for innovation and become part of the fintech “ecosystem,’’ as Bussmann describes it. In April, the bank installed a team of specialists in Level39, a collective workspace for technology start-ups in London’s Canary Wharf.

The Level39 team, led by Senior Innovation Manager Alex Batlin, a computer scientist, is also working with the Swiss- based Ethereum Foundation on using its blockchain for so-called smart contracts. These are computer programs that automatically execute commercial agreements, for example a bond that periodically pays interest to a holder.

“Many of these start-ups have interesting ideas but some don’t quite know how to apply it to real-world business problems,” Murphy said of the industry in general. “The way we’re thinking about engaging is very much a partnership, where we offer them some advice on the application of their technology but leave development to them.’’

Early Stages

While next year may bring breakthroughs in applications of blockchain, the financial industry will probably have to wait two or three years before the technology is introduced more widely, Bussmann said. The first order of business is to develop a standardized architecture for private ledgers, as opposed to the public one used for the bitcoin.

“We are in the very, very early phase stage,’’ Bussmann said. “The race from my perspective is still open. We are putting our eggs in different baskets.’’


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