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Hyperledger Onboards 12 New Members Including Alibaba Cloud, Deutsche Telekom and Citi

Open source initiative Hyperledger has announced 12 new members including Alibaba Cloud, Citi and Deutsche Telekom, among others.

Hyperledger has onboarded 12 new members, including such major firms as Alibaba Cloud, Citi, and Deutsche Telekom, according to an announcement published on Dec. 11.

Launched in 2016, Hyperledger is an open source project created by the Linux Foundation and created to support the development of blockchain-based distributed ledgers.

The new members were announced at the Hyperledger Global Forum in Basel, Switzerland. The latest general members that joined the initiative include Alibaba Cloud, a subsidiary of the e-commerce giant; financial services firm Citigroup, Deutsche Telekom, one of the largest telecoms providers in Europe; and European blockchain trading platform we.trade, among others.

Hyperledger executive director Brian Behlendorf said that “the growing Hyperledger community  reflects the increasing importance of open source efforts to build enterprise blockchain technologies across industries and markets.” Beth Devin, Head of Innovation Network and Emerging Technology at Citi Ventures said:

“We believe blockchain has the potential to drive new forms of efficiency and develop new markets, and are pleased to join the Hyperledger project to advance our exploration.”

This month, the Hyperledger Technical Steering Committee approved the Ursa project, a modular cryptography software library. Ursa is meant to avoid wasted work on duplicate projects, enhancing security by simplifying analysis and making it “less likely for less experienced people to create their own less secure implementations.”

In October, the central bank of Germany, Deutsche Bundesbank, and securities marketplace organizer Deutsche Boerse (DB) successfully completed the trial of a blockchain solution in the settlements area. The transaction volume and speed of a production system were tested on the Hyperledger Fabric framework and Digital Asset, a distributed ledger (DLT) solution for the financial sector.

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Former Pershing Exec Jeff Horowitz Joins Coinbase as Chief Compliance Officer

Crypto exchange and wallet Coinbase has hired former Wall Street exec and banking regulator Jeff Horowitz as its new Chief Compliance Officer.

Major U.S. cryptocurrency wallet and exchange Coinbase announced in a July 31 blog post that ex-Pershing exec Jeff Horowitz will join the company as its Chief Compliance Officer.

Horowitz previously worked as the managing director and global head of compliance at Pershing LLC — a BNY Mellon Company — as well as leading a variety of compliance and anti-money laundering (AML) programs at Citigroup, Goldman Sachs, and Salomon Brothers, and serving as a banking regulator with the Federal Deposit Insurance Corporation (FDIC).

According to Coinbase COO and President Asiff Hirji, Coinbase hired Horowitz to guide them as the company “expand[s] into new markets, and add[s] new services such as Coinbase Custody and our recently announced acquisition of a licensed broker-dealer,” adding,

“Hiring Jeff is recognition on our part that navigating compliance complexities on a global scale requires a concerted, cross-functional effort, guided by leaders with experience that spans policy, financial services, and corporate governance.”

The blog post notes that Mike Lempres, Coinbase’s chief legal and risk officer, will now be able to “exclusively” focus on the company’s government relations efforts.

Earlier this summer, Coinbase had announced the acquisition of securities dealer Keystone Capital Corp. in addition to Venovate Marketplace, Inc., and Digital Wealth LLC., in their bid to become a fully regulated broker dealer by the U.S. Securities and Exchange Commission (SEC).

At the end of July, documents showed that Coinbase had created its own political action committee (PAC), which could potentially allow the company to channel campaign donations to crypto-friendly politicians.

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IBM, Barclays and Citi Team Up to Launch Blockchain App Store for Banks

Even private and permissioned blockchains need to build ecosystems and achieve network effects, just like their permissionless, public counterparts.

At least, that’s the thinking behind LedgerConnect, a financial blockchain “app store” that aims to make it easier for banks to access distributed ledger technology (DLT) solutions from fintech and software providers, and for those vendors in turn to reach bank customers.

Announced Monday, LedgerConnect is the offspring of bank-owned currency trading utility CLS and enterprise software giant IBM, and counts major banks Barclays and Citigroup among its founding members.

In fact, nine financial institutions are participating in the proof of concept (PoC) and have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems.

On LedgerConnect, financial institutions will be able to access DLT-based services in areas such as know-your-customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.

This new hub will address a connectivity gap, where upstart fintechs and large tech firms alike are faced with the cost and complexity of spinning up their own distributed networks so banks can consume their various applications, according to Keith Bear, IBM’s vice president for financial markets.

“Having a secure network and proven infrastructure allows an app store kind of model, where banks can identify applications from certified fintech and software providers and deploy these apps over a seamless blockchain network,” Bear told CoinDesk.

For Barclays, one of the most active banks in the DLT field, the app store is a way to test out a new approach.

Dr. Lee Braine of the investment bank CTO office at Barclays, explained that there are several different deployment options to consider when architecting distributed ledgers for live environments.

For example, if a financial market infrastructure provider like CLS is providing the governance and business services for a particular use case, then there may be an option for that market infrastructure provider to also host the nodes on behalf of the banks in order to accelerate the initial speed to market, said Braine.

“Some banks may also look to explore the more decentralized deployment option of hosting their nodes themselves,” said Braine. “By participating in the LedgerConnect proof-of-concept, Barclays is gaining experience of a distributed ledger private network aimed at connecting both market infrastructure-hosted nodes and bank-hosted nodes.”

LedgerConnect itself runs partly on a permissioned blockchain based on IBM’s blockchain platform, which in turn was built on Hyperledger Fabric, and all the apps currently in the store are Hyperledger-based. However, the founders are open to other enterprise blockchain solutions making use of the app store.   

“We are not averse to supporting other ledger implementations, whether it is R3’s Corda, whether it is Quorum (provided these techs are robust and can meet the needs we have from security perspective etc.),” said Ram Komarraju, head of innovation and solution delivery at CLS.

He added:

“Our expectation is that in principle we will not be limited to one technology only.”

Original consortium

Stepping back, CLS can perhaps be thought of as the original blockchain consortium.

Granted, it was founded in 2002 (six years before the first blockchain was conceived) to provide plumbing for FX trades. But it’s been testing blockchain technology since early 2015, before Hyperledger started and when R3 was still flying under the radar.

The early CLS blockchain efforts were later formalized into CLSNet, a way of testing blockchain to match and net trades involving a range of new currencies not on the main platform, keeping immature blockchain technology separate from the core settlement engine used by 60 large financial institutions.

“There is a lot of trade processing we do for banks and buy-side firms, without getting to the last mission-critical aspects of settlement itself,” said Komarraju.

As such, CLSNet will be one of the first applications on the new LedgerConnect portal. All these apps have been selected in the hope of removing typical reconciliation efforts and data duplication (remedies include things like capturing digitalized master agreements of derivatives contracts on a single ledger for example).

“Look at capital markets today, every bank has its own silo office systems even though they are trading typically with a counterparty that has the same type of business logic but using the same technology stack,” added Komarraju.

IBM and CLS go back a ways; the main CLS platform was built by IBM. And LedgerConnect is a way of joining the dots between their respective financial infrastructure and blockchain work, at the same time extending the blockchain work CLS has been doing beyond foreign exchange into other capital market domains.

“This is really leveraging the combination of CLS’s position as a globally systemically important market utility owned by the banks, and also IBM’s investment in that,” said Komarraju.

PoC fatigue

Unlike the average PoC, LedgerConnect is at quite an advanced state, according to Komarraju.

“We didn’t start this on Monday,” he said. We have institutions that have selected a number of use cases and these have been implemented and we are in the very late stages of proving the technology.”

While Barclays and Citi are the only banks being named at this time, big hitters like JPMorgan and Goldman, which are both part of CLSNet, are logical candidates to take part.

Another list of likely suspects are the banks on the we.trade platform, which also uses Hyperledger in the form of an IBM software-as-a-service (SaaS) model.

Explaining why CLS couldn’t reveal all the participants in LedgerConnect, Komarraju hinted that some of these big banks are experiencing a bit of blockchain PoC fatigue.

“We cannot share the names of full list of banks because we haven’t (yet) received the approvals from some of them. Some of them wanted to wait until the proof of concept is complete and others needed more time for internal approvals,” he said.

Meanwhile, Bear of IBM said the whole reason we are seeing PoC fatigue is because so many of them don’t progress. While this can be because of a weak business case, or one that doesn’t need a blockchain, oftentimes it comes down to the cost and complexity of getting a network up and running.

“In many ways we are trying to get rid of that PoC fatigue,” said Bear. “I know we have to go through a PoC to do that, but it’s kind of inevitable.”

IBM image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Banks Buy Stakes in Blockchain Startup SETL

Financial services group Citi has bought a stake in blockchain startup SETL.

The move, announced today, comes less than three weeks after the French banking institution Credit Agricole also became a minority shareholder. Other investors in the startup include Computershare, Deloitte, and banking company S2iEM.

SETL noted that Computershare had boosted its stake in the blockchain startup, and that Stuart Irving, Computershare’s group CEO, is joining its board of directors. In statements, the startup suggested that, combined, it was “adding significantly to the strength [of] the company.”

“We are pleased to announce that we have extended our shareholder register with both new and existing partners and have agreed the scope of a number of revenue generating projects,” Peter Randall, SETL’s CEO, said of the investments.

The startup aims to facilitate the movement of cash and other assets between two parties using a permissioned ledger it developed. This, in turn, would make it easier to match and settle different types of transactions.

SETL previously trialed its platform with OFI Asset Management earlier last month through the startup’s IZNES fund record-keeping system, as CoinDesk previously reported.

Launched in 2015, the startup was founded by former executives from the finance space, including Randall, who is the former CEO of the Chi-X equity exchange.

Business miniatures image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Citigroup CEO: Bitcoin Threat Will Give Rise to State Cryptocurrencies

Citigroup CEO Michael Corbat has predicted that state-sponsored digital currencies will arise from the threat posed by bitcoin.

In an interview with Bloomberg at a summit in New York yesterday, Corbat said that cryptocurrencies represent a “real enough threat” to the financial system, and that governments wont take the disruption of their capabilities around data, tax collection, money laundering and know-your-customer (KYC) “lightly.”

He continued:

“It’s likely that we’re going to see governments introduce, not cryptocurrencies – I think cryptocurrency is a bad moniker for that – but a digital currency.”

While encouraging people to go out and try using cryptocurrencies, which he said are still “pretty clunky,” Corbat argued that the underlying blockchain technology “has potential” and should not be dismissed.

Citi is already exploring its own cryptocurrency, called citicoin, which is aimed to curb friction in cross-border foreign exchange transactions. The financial group is also working with Nasdaq on using blockchain technology for trading private shares.

Corbat’s comments come soon after Goldman Sachs CEO Lloyd Blankfein said that he isn’t “comfortable” with bitcoin, but open to its potential.

Michael Corbat image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Digital Dollars and Digital Pounds, Citi Executive Believes Digitized Fiat Currency is Key to Blockchain Adoption

Investment banking group Citi’s newly appointed head of core cash management for Asia-Pacific, Morgan McKenney, said that the key to the mainstream adoption of Blockchain technology is the introduction of state-backed virtual currencies. She added that the ultimate success of distributed ledger technology relies on the use of fiat currencies issued on a Blockchain.

McKenney also talked about the bank’s CitiConnect Blockchain project. The project aims to resolve the liquidity issues in the private securities market by leveraging the technology from Blockchain startup company Chain. She said that to fully unlock the project’s potential, virtual currencies are the most ideal payment method.

McKenney also discussed how atomic swaps can be further empowered if any number of cryptocurrency assets could be bought with a Blockchain-based fiat currency.

“If you had a digital dollar, if you had a digital pound, exactly fungible with the note in your wallet and the dollar in your bank account, then you’d be willing to use that digital currency much more throughout your ongoing daily transactions.”

Other Citi projects/investments

According to McKenney, the bank has also pursued other projects aside from exploring other possible collaboration opportunities for its CitiConnect platform. Among these projects are the investments made in several Blockchain startups, namely, Chain, Digital Asset Holdings, and Axoni.

All the companies offer Blockchain solutions that don’t include a native digital currency.

She also added that the bank is currently not interested in advancing projects to explore a virtual currency outside of state-backed digital currency, it remains open for that possibility in the future.

 “I wouldn’t want to make statement that we’re explicitly ruling out anything, but we’re taking a strategic approach that reflects the earlier stage of Blockchain versus some other technologies.”