T. Rowe Price Associates is one of a group of Wall Street firms making a renewed push to test a new version of the Avalanche blockchain to see if the technology could make financial transactions more efficient. How can it be made?
According to a press release, the firm, along with Cumberland, WisdomTree Inc. and Wellington Management Group LLC, will begin experimenting with financial trade execution and settlement on the blockchain with a new application called Spruce. KKR & Co. Inc. and Apollo Global Management Inc. Similar moves are followed by JPMorgan Chase & Co. which executed its first public blockchain trade last year.
Tea. “This is an opportunity for us to really explore … in an extremely low-risk environment where there is no capital at risk,” Blue McCallery, head of digital asset strategy at Rowe Price, said in an interview. DeFi, as it currently exists, has a lot of barriers to institutional participation” including compliance, he said.
Partner firms plan to test Spruce’s valueless token system on foreign exchange and interest rate swaps, which could potentially lead to cost savings and reduce risks associated with decentralized finance, known as DeFi. Is.
An earlier report by Uniswap Labs and USD Coin stablecoin issuer Circle said that moving the $7.2 trillion global currency market to a blockchain would cut the cost of global remittances by 80% and eliminate settlement risk.
“The token has no value, but it allows us to understand both regulatory and financial requirements to conduct transactions on-chain,” said John Wu, president of Ava Labs, the lead developer behind Avalanche, in an interview. Spruce is enabling everyone in the “regulated buy- and sell-side institutions” to “basically experiment with on-chain finance.”
Within the “testnet” version of Spruce, financial institutions’ digital wallets will receive non-transferable tokens that prove they’ve passed validation checks such as the Know Your Customer process, according to the release.
Spruce is Ava Labs’ latest effort to provide institutions with equipment for custom-built blockchain networks as part of Avalanche’s Evergreen Subnet, which is like a smaller version of Avalanche’s main blockchain. Evergreen Network aims to help institutions overcome some of the challenges in adopting blockchain technology, especially in the field of decentralized finance.
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