Nasdaq to Develop Blockchain Securities Applications in Estonia

Nasdaq Inc is reportedly looking to expand its blockchain ambitions beyond the US, planning securities-focused applications in Estonia.

Nasdaq Inc is reportedly looking to expand its blockchain ambitions beyond the US, planning securities-focused applications in Estonia.

The company, which operates the world’s second largest stock exchange in New York and powers several others, became one of the most prominent financial players to enter the nascent discipline when it announced its blockchain ambitions earlier this year. It has partnered with Chain, a crypto startup, in developing technology that would streamline the transfer of pre-IPO shares on its Private Market and potentially serve as a prototype for its main exchange.

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In an interview with Reuters, Nasdaq Co-President Hans-Ole Jochumsen said that the new applications would aim to improve the proxy voting process, as well as company and public pension registration, which Nasdaq already manages per a contract with Estonia’s government.

Bitcoin’s blockchain, and analogous distributed ledger systems inspired by it, are envisioned to revolutionize how securities trades are settled. A plethora of other applications are also being explored- including voting- as observed by its reported use in a Republican debate straw poll.

Estonia is viewed as a good testing ground for these initiatives, explained Jochumsen, due to its small size (1.3 million) and Nasdaq’s existing presence in its securities markets. Nasdaq owns the Tallinn Stock Exchange, the country’s only regulated secondary securities market, and the Estonia Central Securities Depository (ECSD), which administers its share registries.

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“It’s a smaller country, so it’s not very complex in size, and there is a government that is very keen to use technology. They claim that they are in the forefront of using technology in the public center worldwide,” he said.

Jochumsen added that Nasdaq’s plans for its Private Market are on track for launch by the previously announced target of end-2015.

Estonia’s LHV Bank came into the spotlight not long after Nasdaq’s big announcement earlier this year, becoming one of the first of dozens of banks to disclose their interest in the blockchain.

The online-focused bank said it is developing a financial product based on Colored Coins technology. Unlike most financial institutions, which are more keen on developing private, or “permissioned”, blockchain systems that have nothing to do with Bitcoin, LHV’s project is powered by Colored Coins, which works off the Bitcoin network.

This has also been the approach reportedly taken by Nasdaq thus far; it previously reported using the Open Assets Protocol, a Colored Coins technology.

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