This December 2016 report written by Javier Sebastian Cermeño and published by BBVA Research explores the topic of blockchain in financial services. Specifically, emphasis is placed on the regulatory landscape for blockchain, and potential future challenges surrounding its commercial application.
Distributed ledger technologies, or DLTs, including blockchains, currently receive considerable interest from established industries, and this trend is still on the rise. Financial services firms are especially interested in DLTs, which are viewed as a potential driver for major savings in infrastructure and back-office processes.
DLTs will likely facilitate the development of new digital businesses, which will, in turn, lead to new sources of revenue. That being said, unsolved technological, operational, business, and regulatory challenges mean that distributed ledger technologies still have some way to go before they are ready for mass adoption.
This working paper begins by providing a review of the basic concepts surrounding distributed ledger technologies, followed by an overview of the current state of blockchain regulation in relevant regions of the world. The author also reflects on the potential of blockchain as a tool for regulators themselves. The final section of the report identifies and analyses the key regulatory challenges that must be addressed, as well as the technological and operational challenges associated with blockchain. Useful visual aids are provided throughout the report, and the conclusion summarises the key findings.
To download the full report click here.