European Financial Institutions to Launch Blockchain Investment Platform

Published at: March 17, 2020

Major European financial institutions are jointly launching a blockchain-based platform for the investment fund industry.

The system was initially incubated by the Luxembourg Stock Exchange and its affiliate Fundsquare, which, alongside Clearstream, Credit Suisse Asset Management and Natixis Investment Managers, have announced a Series A investment round for “FundsDLT.”

FundsDLT for cost reduction

According to a March 17 announcement, the FundsDLT platform is based on Ethereum’s (ETH) blockchain and allows asset managers, distributors, asset servicers, and the supply chain to reduce costs. The cost reduction is achieved by removing redundant activities while providing transparency and allowing digital fund distribution. A Credit Suisse Asset Management representative told Cointelegraph:

“FundsDLT is a platform for the investment fund industry using distributed ledger technology (DLT), with the aim to streamline fund distribution. The company will use DLT and smart contracts to provide register and account management, transaction processing as well as cash settlement / reporting.”

The advantages of DLT

The Credit Suisse spokesperson also explained to Cointelegraph that while the system is Ethereum-based, it uses the Quorum system as a private blockchain to ensure privacy and performance. The representative also pointed out that the project does not provide any exposure to crypto assets and is just employing DLT to offer services already provided by existing intermediaries with enhanced efficiency.

Natixis Investment Managers chief global operating officer Joseph Pinto highlighted the importance of blockchain for the industry:

“The digital transformation poses some of the greatest challenges and opportunities for the investment management industry today, and blockchain can play an important role. We believe it is critical for the investment management industry to increase transparency and improve operations rapidly.”

FundsDLT, Clearstream and the Luxembourg Stock Exchange did not answer to Cointelegraph’s inquiry by press time.

Blockchain sees adoption in finance

Given its potential to enhance the transparency and accessibility of systems, blockchain is seeing increasing adoption in the finance industry. As Cointelegraph recently reported, over 20 Chinese banks used blockchain to process over $56 million in foreign trade transactions.

Furthermore, major banks including HSBC, BNP Paribas and Citi will soon launch a blockchain trade finance platform in Singapore.

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