Nasdaq has partnered with crypto startup Chain to develop its project envisioning the blockchain for streamlining the transfer of securities on its Private Market.
Nasdaq unveiled the initiative last month, becoming one of the most prominent financial players to dabble in blockchain technology thus far. It seeks to revolutionize the issuance and transfer of shares of pre-IPO companies, currently a manual process that involves lawyers maintaining spreadsheets by hand.
Chain helps developers build apps by providing streamlined access to Bitcoin’s blockchain via its Chain Nodes and API. The startup has secured $13.7 million in funding to date. In partnering with the world’s second largest stock exchange by market capitalization, it becomes one of most influential players in the crypto industry, and underscores the seriousness of the blockchain technology phenomenon.
Said Bob Greifeld, CEO of Nasdaq:
“We are excited about the potential impact of this new endeavor with Chain on the transaction process. This Nasdaq Private Market project aims to simplify the overwhelming challenges private companies face with manual ledger record-keeping. As blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole, Nasdaq aims to be at the center of this watershed development.”
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The project leverages the Open Assets Protocol, a colored coin innovation for building property transfer capabilities over the blockchain.
Anticipated benefits include faster settlement times, greater data integrity capabilities, transfers that are more secure, reduced counterparty risk and the decentralization of trust from a middleman.
Nasdaq is the creator of the world’s first entirely electronic stock market in 1971. Its pioneering into the blockchain space is the next manifestation of what can be described as a disruptive vision. Chain CEO Adam Ludwin commented, “Nasdaq’s technology and thought leadership in creating new, dynamic markets will carry over into the blockchain space in truly disruptive ways.”
The partnership with a crypto startup is also the first to be disclosed among large financial players with blockchain technology plans. It remains to be seen if others attempt to do it on their own, or will seek top-notch talent from the crypto industry, which is in tight supply.
The project’s implementation on the Private Market is expected later this year.