by Joseph Young
Chain Inc., a San Francisco-based blockchain software company has raised US$30 million from Wall Street companies and investment banks, including Visa Inc., Citi Ventures and NASDAQ Inc, to enable institutions “to design, deploy, and operate blockchain networks that can power any type of asset in any market.”
Chain Inc. aims to be the leading startup in its sector to assist organizations and banks to implement and deploy specialized blockchain networks to trade financial and smart assets securely, with low costs.
Interestingly, the growing interests of Wall Street institutions and companies in the blockchain technology has allowed the bitcoin startup to secure a funding round from NASDAQ and former American Express Co. CEO and venture capitalist Jim Robinson III, who will be joining the startup as a board member.
“We believe in the power of blockchain technology to transform how financial assets are transferred, but it has to be done with the right partners to insure it gets off the ground,” said Adam Ludwin, CEO of Chain, in a Nasdaq interview.
Revolutionizing the Stock Market Platform
Until the 1960s, all assets were “securely” settled on paper and were delivered as physical certificates to their rightful owners. Following the Paperwork Crisis of 1968, however, the volume of trading rose so quickly, that stock markets were unable to issue paper/physical certificates and had to stop trading for a short period of time.
As a solution, brokerages and stock market trading platforms have created the Depository Trust and Clearing Corp, which facilitates settlements for financial markets. Today, the DTCC is responsible for settling and clearing more than US$1.6 quadrillion worth of transactions annually.
The inefficiency of the stock market’s settlement technologies and the ridiculously large amount of human labor and costs have forced stock exchanges to search for alternative solutions and technologies to settle assets and transactions quickly and without costs.
As a result, stock exchanges like NASDAQ have begun to shifted their focus on blockchain technology, and toward startups like Chain Inc. that utilize blockchain technology to settle and process the transfer of assets.
“Those processes that came after the paperwork crisis were better, but there is a need now for a more elegant and better solution,” said Hans Morris, a former president of Visa who runs a financial technology investment firm Nyca Partners.
In May 2015, NASDAQ OMX Group Inc. partnered with Chain to pilot test a blockchain-based asset trading platform for private companies. Today, NASDAQ and Chain are working together to create a blockchain based marketplace for pre-IPO trading of shares in private companies listed on NASDAQ private market.
”We are excited about the potential impact of this new endeavor with Chain on the transaction process. 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,” Bob Greifeld, CEO of Nasdaq, said in a statement.