SaaS-Blockchain Platform FiO Releases Alpha Version at GDG Meetup in Taiwan

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  • Driving blockchain business in earnest by unveiling ‘WEMIX’, a blockchain platform developed in-house

  • Pre-registration for upcoming mobile game ‘Cryptornado for WEMIX

  • Offering giveaways of 200,000 KLAY, 4,000,000 WEMIX, NFT items, gold and game tokens

SEOUL, South Korea, Jan. 21, 2020 /PRNewswire/ — Wemade Tree, a subsidiary company of Wemade Co., Ltd., as its flagship blockchain gaming services arm, is holding a promotion to celebrate the launch of its blockchain platform called ‘WEMIX’.

WEMIX Launching Promotion
WEMIX Launching Promotion

The promotion, involving two rounds of campaigns, will be held from January 21 to February 28. Each round offers 3 missions that anyone with a WEMIX account can participate in.

Users can purchase gift boxes with WEMIX tokens that are given away every 3 hours after signing up for an account from WEMIX platform. By opening the gift boxes, they can earn randomly-offered alphabet characters and game tokens.

With the rewards, users can participate in three missions: a bingo game, where they collect and complete a phrase; ‘PLAY! WEMIX NETWORK’, a game token collecting mission; and pre-registration for ‘Cryptornado for WEMIX’.

Users who complete these missions are qualified for a prize of 200,000 KLAY. KLAY is the cryptocurrency issued by Klaytn, where Wemade Tree is a member of its Governance Council. Klaytn is a blockchain platform developed by Ground X, a subsidiary of the leading South Korean mobile platform, Kakao, with over 50 million monthly users.

Wemade Tree is also gearing up for the launch of ‘Cryptornado for WEMIX’ with a pre-registration campaign. It is a blockchain-based mobile idle RPG developed in-house. Pre-registering users will be rewarded with 4,000,000 WEMIX, NFT items, gold and game tokens(TORNADO) on the official launch date.

Cryptornado for WEMIX’ will be followed by ‘Chuanqi H5 for WEMIX’, a game powered by the famous Legend of Mir IP, and subsequently by other successful games including ‘Windrunner for WEMIX’, ‘CandyPang for WEMIX’, ‘Everytown for WEMIX’, ‘My Secret Bistro for WEMIX’, ‘Touch Fighter for WEMIX’, and ‘Chuanqi mobile for WEMIX’. These games add up to 600million downloads in total.

WEMIX has adopted Google authentication to lower the entrance barriers for users, while existing blockchain games require users to go through cumbersome sign-in process.

More information for the WEMIX launching promotion and the pre-registration for the upcoming crypto RPG is available on the WEMIX Wallet website (

For media enquiries:

Wemade Tree Service Team 

‘WEMIX’ Blockchain Platform Logo

View original content to download multimedia:

SOURCE Wemade Tree

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A century ago, worker protests were common: coal miners, railway men, and garment factory seamstresses fought for standardized hours, fair pay and better working conditions. The rise of labor unions and a decent social safety net lulled us into believing their issues were a thing of the past.

However, the 50-year detente in the mid-20th century between workers and business was actually an abnormality. Recent protests by Uber drivers, hotel workers and DoorDash couriers have been a clear reminder that the debate about who should enjoy the benefits of economic growth – workers, employers, customers or all three – is still very much with us.

I would argue that much like their early 1900s counterparts, workers today find themselves with greater economic and social instability – this time due to an economy shifting away from full-time employment to so-called gig employment. 

Gig workers—contractors who rely on technology platforms for one-off tasks, such as driving, food delivery and odd jobs—are on the unfortunate downside of this shift. Here are the biggest ways:

The illusion of freedom

The main incentive used to lure workers to shared economy platforms is supposed freedom — workers are free to do whatever they want, whenever they want. Be your own boss! Make your own hours! No more commuting! No annoying coworkers!

But for most gig workers, the “freedom” they are offered is really anything BUT freedom. You aren’t free if you have to be on-call all day in case a potential gig pops up. And because there is no guarantee of work, individuals often take on a task because there is a financial imperative to do so. 

A certain level of predictability allows 9-5 employees to plan their work days and weeks around childcare, appointments and social activities. Being constantly at the ready does not create the basic level of stability gig workers need to be healthy and productive.

Brutally low wages

For many, gig work is low-paying work. Only a handful of people have been able to make a massive paycheck from gig work. A report from the U.S. Federal Reserve last year found that nearly 60 percent of workers who earned their primary source of income from gig work would not have the funds to cover a $400 emergency. That’s almost 25 percentage points higher than those who earn their income from a traditional job. 

Just as problematic, the work is often not continuous, further depressing wages. Financial hardship is exacerbated since these jobs are often per task and not based on time.

In some cases, gig workers also have to pay twice as much in payroll deductions as part-timers, since their employer isn’t covering the other half. That means gig workers essentially have a 7.65 percent gig tax placed on them in the United States. Add to that no retirement savings contribution, no parental leave, no worker compensation protections … and you end up with a brutally low paycheck. 

Unaffordable or no health care

A gig worker is on their own in every aspect. The biggest hurdle in the United States is finding affordable and high-quality healthcare on the open market, which remains a struggle despite Affordable Care Act reforms. Many plans have high premiums with even higher deductibles, rendering the insurance feeling useless when it is needed the most.

Deskilling of work

As more high-paying jobs in the 21st century require specialized skills, gig work exploits workers with little expertise. Cab drivers in London used to have to know its spaghetti-like streets forward and backward and prove their knowledge by taking a rigorous exam. Now, there’s an app for that – but one with a much less knowledgeable driver at the wheel.

How technology can start to solve these issues

To date, large platforms like Foodora, InstaCart and Lyft have used technology to further entrench their positions and hold gig workers captive. They’ve created apps that cement themselves as the main beneficiaries of economic growth, typically at the worker’s expense.

But new technologies are emerging that can put workers back in control – solutions where power and data are not centralized. More companies and people are exploring the potential of blockchain technology to create apps and services that are truly open and not subservient to the economic interests of platform companies. If technology was an accomplice in creating the problem, perhaps it can now solve it too.

There are several real-world use cases where this is already happening: the UN is using blockchain to help Mongolian goat farmers; it’s being used for land registry in India; and we’ve partnered with Velocia to deploy a blockchain-based solution that incentivizes taking public over private transit. It’s not such a stretch to imagine this technology being used to solve problems like the ones I’ve outlined above.

A report from MetLife Inc states that “almost 30 million Americans get their primary income from gig work, constituting nearly a fifth of the total workforce.” This number isn’t likely to decrease any time soon. The economy can and will keep growing, but large trends will force us to find a better answer to the question of how that growth should be split. If we don’t, we are in for a turbulent decade.

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Finance is changing rapidly through mergers and acquisitions, but not rapidly enough. There will be tremendous pressure for traditional payment processors to get with the times and adopt blockchain, or else they will be left behind by lower-cost competitors.


V, +1.53%

 on Jan. 13 said it plans to acquire Plaid, a back-end software company that helps applications connect to user accounts, for $5.3 billion. Plaid’s client list includes Venmo, Robinhood and cryptocurrency platforms such as Coinbase. Last year, Mastercard

MA, +0.20%

 acquired Nets for $3.2 billion, to help its move into account-to-account payments, and Vocalink for almost $1 billion.

Those multibillion-dollar acquisitions will help both credit-card companies remain relevant, for now, as non-card payments erode market share.

See: Beth Kindig runs a forum on tech stocks where she recommends stocks and answers readers’ questions.

Those price tags barely scratch the surface of what the finance industry is capable of paying, as the industry consolidates to stay competitive. Last year, Fidelity National Information Services

FIS, +0.60%

  acquired Worldpay for $43 billion in cash and stock, Fiserv

FISV, +0.25%

 bought First Data for $22 billion, and Global Payments

GPN, +0.36%

 purchased Total System Services for $21.5 billion.

No benefits to consumers, merchants

The real value to consumers and merchants has yet to be seen. Square

SQ, -0.48%

 may have replaced cash registers, but the fees the company charges are as old-school as ever. Square charges 2.6% plus 10 cents per transaction.

Similarly, PayPal

PYPL, -0.05%

 may have the lead in the U.S. as a fintech platform, though it does little to innovate in a way that lowers costs. In fact, PayPal charges merchants even if a customer is refunded. After acquiring Venmo, the peer-to-peer (P2P) payment app celebrated as a way to send free payments, PayPal continues to charge merchants 2.9% plus a 30-cent transaction fee when collecting from the Venmo app.

From that perspective, Venmo and P2P apps don’t really innovate at all, as retailers coughed up a whopping $108 billion in electronic-payment costs last year.

David Ritter, a financial analyst, summed it up well when he said: “Square merchants with low average tickets may fuss over higher costs, but per-transaction fees are typical of alternatives.” Meaning: Merchants have no other choice.

Defending market share

This is important because we have not yet seen the true disruption in finance, despite ongoing sprees of fintech deals. Although Visa, Mastercard, PayPal and Square are acquiring tech startups to help maintain their current positions, the purchases will not allow for the kind of growth that makes for meaningful gains.

In fact, Visa’s acquisition of Plaid is dilutive and won’t be accretive to earnings for an estimated three years.

Blockchain is the answer

According to a recent survey, 75% of consumers have used a fintech service. Of those, competitive fees and rates are their top priority. In addition, 68% of consumers are willing to try a financial proposition from a non-financial company, which is a risk to incumbents.

Two examples of companies that are innovating to lower prices in fintech include Robinhood and Alipay. Both took major market share by simply lowering prices. Robinhood allows for free stock trades, while Alipay charges merchants 0.55%, compared with the typical 3% charged by credit-card companies.

This resulted in Alipay quickly growing to 1 billion users since launching in 2008. Compare that to PayPal’s

PYPL, -0.05%

275 million users in 20 years since its 1998 launch. Alipay is the kind of growth you want to see as an investor. Tencent’s

TCEHY, -3.53%

 WeChat has also crossed the 1 billion user mark with many using WePay.

In fact, digital payments are so wildly successful that the People’s Bank of China has had to forbid discrimination against cash by merchants who will accept only digital payments.

According to some estimates, the savings in merchant fees could be as much as $43 billion if the United States had third-party payment apps such as Alipay and WePay. That is because for every $100 spent on a credit-card purchase, $2.20 goes to the issuing bank, 23 cents to a payment processor, 19 cents to the acquiring bank and 13 cents to the card network.

Meanwhile, PayPal’s $4 billion acquisition of Honey, which helps users discover rewards and deals while shopping through a browser extension, is in sharp contrast to the fintech companies in China that have lowered fees. The PayPal-Honey acquisition is meant to drive the same type of higher payments from customers as do many of PayPal’s other acquisitions, such as Braintree, Xoom and Hyperwallet. That strategy places an easy target on PayPal, as new blockchain startups gather strength.

Deploying blockchain systems will remove third-party centralization networks for small to medium-size businesses in lieu of peer-to-peer networks. While there is debate about the viability of bitcoin

BTCUSD, -0.47%,

blockchain is very much a reality, and can be secured by so-called stablecoins if merchants prefer to be backed by the national currency.

Interestingly enough, banks are leading the way with blockchain. J.P. Morgan Chase

JPM, -0.19%

 has been working on a blockchain system since 2015. It revealed JPM Coin in 2019, a stablecoin tied to the U.S. dollar. PayPal, Square, Mastercard and Visa are also pioneering blockchain projects.

As developers of the blockchain system have pointed out, the ultimate goal is to have JPM Coin connect private ledgers to a public blockchain. These developers believe that would put major pressure on other financial institutions and fintech companies in about five years.

Digitization in the finance industry is built atop age-old infrastructure and ignores the most obvious area in need of disruption: transaction fees. Visa and Mastercard are making acquisitions to remain relevant and competitive, while PayPal and Square are getting on more devices with peer-to-peer apps such as Venmo and Cash App.

Those moves won’t lead to massive growth. An overhaul of the infrastructure via blockchain will take some time, and only then will investors enjoy serious investment returns.

The writer owns no shares of companies mentioned in this article.

Beth Kindig is a San Francisco-based technology analyst with more than a decade of experience in analyzing private and public technology companies. Kindig publishes a free newsletter on tech stocks at Beth.Technology and runs a premium research service.

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The Nori team at a Techstars Demo Day. (Nori Photo)

Microsoft’s sweeping pledge to remove more planet-warming carbon from the atmosphere than it emits has the tech world buzzing about “carbon removal.”  A Seattle startup just raised cash to take that concept to a new level.

Nori operates a blockchain-based marketplace with its own cryptocurrency tokens to allow corporations, governments and individuals to fund efforts to reduce levels of carbon dioxide in the air. It just raised $1.3 million in a “pre-seed” round to continue this push.

The cryptocurrency would pay farmers to capture the gas by using sustainable farming techniques that promote the growth of microbes and bacteria in topsoil. The microscopic organisms pull CO2 out of the air and hold it in the ground where it won’t heat the planet.

Nori’s cash infusion will fund operations through the middle of the year, CEO Paul Gambill told GeekWire. The startup plans to raise an additional $5 million from venture capital firms in the next few months to expand its 10-person team. The company faces more demand than it can handle right now, Gambill said, hence the need to boost headcount.

Carbon removal prices are mostly decided by government regulation, rather than the market, Gambill said. Nori wants to create incentives to bring more people into the fight against climate change.

“If we want people to do something that is going to pull carbon out of the air, the simplest way to get them to do it is to pay them,” Gambill said.

Nori CEO Paul Gambill. (Nori Photo)

Nori, a graduate of the Techstars Sustainability Accelerator, just launched its marketplace late last year. The platform runs on cash/credit payments, but the company plans to start selling its tokens this quarter. Nori makes money by charging a transaction fee to the people and companies funding the sustainable farming efforts.

Nori eschewed traditional equity investment to fuel its growth in favor of Simple Agreements for Future Tokens, otherwise known as a SAFT. Investors commit cash to the startup in exchange for the guarantee of future tokens in an initial coin offering.

The value of a token is tied to the market price for a ton of carbon removed from the atmosphere. Right now, the cash value of a single token, which pays for one ton of carbon removal, is about $15.

Nori gives investors access to discounted tokens that they can sell for a higher return or use to offset their own emissions. Employees will also get tokens as incentives.

“We all have skin in the game, and this way everyone benefits when the value of a token increases,” Gambill said.

Gambill spent nearly three years at consulting giant Deloitte as a software product manager building apps for big brands such as Target, Nike, Starbucks and more. He went on to become a founder of two startups: iMessage sticker design company You Enjoy My Stickers and Happy Crate, a cannabis subscription service.

Gambill settled on climate change after reading about the frustrations of scientists unable to get people to listen to their warnings about the dire consequences of the phenomenon.

Through the Carbon Removal Seattle meetup group he hooked up with his first co-founder: Christoph Jospe, then a chief strategist for the Center for Negative Carbon Emissions at Gambill’s alma mater, Arizona State University. Klaus Lackner, director of the emissions center at ASU, is on Nori’s board.

Gambill applauded Microsoft’s efforts to become “carbon negative” by 2030, removing more carbon from the environment than it emits each year. Even more impressive, he said, is Microsoft’s goal of removing enough carbon by 2050 to make up for all of its emissions and electrical consumption since its founding decades ago.

Gambill sees the move as a validation of Nori’s business model and a sign that the world is embracing carbon removal.

“Carbon dioxide emissions are like garbage we’re throwing out on the street, and Microsoft is saying they want to pick up all their garbage, recycle what they can, and dispose responsibly of the rest,” Gambill said. “That’s fantastic leadership, and I expect to see more companies pushed by their employees and shareholders to follow suit.”

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In 2019, the hype and hoopla surrounding Blockchain and cryptocurrency seemed to have died down a bit. While awareness about this technology has begun, it still remains a far cry from being accepted into mainstream businesses. It has taken considerable time for blockchain to break away from the myth of being only a cryptocurrency technology, suitable only for crypto transactions. However, it still has not completely lost that shadow.

On the other hand, the promise and possibility that blockchain presents have prompted many global economies to adopt and implement it. India is a global emerging economy that has been left behind in the blockchain race.

A technology that allows for the decentralisation of value transaction, make it accessible yet secure, transparent yet tamper-proof and traceable, makes it a utopian solution for many business verticals. The compelling benefits of blockchain have been a driving factor for its adoption in banking, healthcare industry, pharma, supply chain management, education, digital identity, logistics, and others.

But there is more to the Indian chapter of blockchain than what meets the eye. Unabated adoption of blockchain needs human capital – skilled, competent, and exciting to be part of a new paradigm. There are a plethora of opportunities for blockchain adoption in India as well as challenges. Overcoming these by creating awareness will be the decider for blockchain implementation.

Opportunities for Blockchain in India

  1. Post demonetisation, India has developed a progressive outlook towards digitisation, and is aware of the benefits blockchain offers, and its potential in good governance.
  2. The Indian government’s blockchain initiatives are clearly visible through the showcase of many proofs-of-concept (PoC) demonstrated in the areas of banking, land registry, and insurance.
  3. The Institute for Development and Research in Banking Technology (IDRBT), the technology arm of the Reserve Bank of India (RBI), led two PoCs – domestic trade finance letter of credit and enhanced information for payments – by involving banks and technology firms such as Infosys and IBM.
  4. Andhra Pradesh is the first state in the country to introduce blockchain in land records and is also setting up a Blockchain Centre of Excellence to set up India’s first Blockchain state. Other states like Maharashtra, Karnataka, Kerala, and Rajasthan are following the lead.

Many other Indian corporate players too have become early adopters and have tested concepts in the sectors of trade finance, cross-border payments, supply chain management, digital identity, and loyalty programmes. Before they reached the PoC test usage stage, they have met a fair share of challenges.

Challenges for Blockchain adoption in India

While blockchain adoption and initiatives are only concentrated in certain tech-savvy circles, the biggest challenges facing widespread adoption and implementation include:

  1. Awareness about blockchain is very limited and shrouded by the disrepute of the unregulated cryptocurrency market. Businesses interested in blockchain could probably set aside an internal team focused to understand the technology, its impact, and areas of usage.
  2. Blockchain is considered as a complete technology that will replace existing technologies. This misunderstanding has also been a hindrance in its adoption. People need to comprehend that blockchain is a tech component that will be integrated with the current system to enable business applications and new approaches. A professional services company has debuted a miniature model of a blockchain framework to demonstrate blockchain in a practical and tangible manner.
  3. Blockchain-based financial services are being worked upon. Many Indian banks have started to implement the blockchain ecosystem within their banking system. But the lack of regulation and a specific regulatory body to bring in standardisation and approval for mainstream implementation is another complication.
  4. Another complexity is in the integration of the current technology with the blockchain and data security during the early stage development.
  5. Adding to all this is the ban on cryptocurrency in India. Indian blockchain startups raise their funds through ICO (initial coin offering) rather than through the traditional funding process. The ban on cryptocurrencies has adversely affected them, and now startups are moving outside India to raise funding.

Regulation and widespread awareness through purposeful research into blockchain will only be the way forward to remove these complications.

(Edited by Megha Reddy)

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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Blockchain Related Investments in China Declined 40% y-o-y in 2019 January 21, 2020 January 21, 2020 Kelly Cromley http://1AZFjzw2#Nwf63pYaMWq#xIY

As per the latest study by China’s statistical organizations, the country’s blockchain spending in finance and investment sectors have tumbled more than 40% last year.

In 2019, there were 245 investment and funding deals in China, a decline of almost 60% from prior year.

As per a joint study by Beijing run financial information and media enterprise Xinhua and financial info platform Rhino Data, the total amount committed on blockchain projects was Chinese yuan 24.40 billion (~$3.60 billion).

The study, officially reported by Xinhua Finance, indicates that the figure declined 40.8% in 2019, compared with 2018.

Nevertheless, both the value and count of ventures have considerably increased since 2017. Until this day, 2018 tops the list of years that saw maximum blockchain investments in China.

In 2018 alone, more than 600 contracts were signed, while contracts for only 168 projects were signed in 2017.

Xinhua, as part of the research, discovered that initial phase investments such as Series A financing rounds represented 43.3% in2019, while the ratio of strategic investment and mergers and acquisitions in the 2H19 rose considerably. Furthermore, 292 institutions have taken part in funding rounds, with Beijing, Shenzhen and Hangzhou drawing the largest blockchain ventures.

China continues to laydown solid foundation for blockchain adoption, with its President advocating, in October 2019, the need to accelerate blockchain implementation. However, blockchain spending in 2019 has practically declined last year, surprising many blockchain and crypto enthusiasts.

In late 2019, Xinhua pointed to a study by American market intelligence company IDC forecasting that the country’s overall commitment towards blockchain based projects will surpass $2 billion in2023.

In addition to financing blockchain projects, the Chinese government has also one ahead in its creation of a government backed cryptocurrency, the digital yuan. The People’s Bank of China had conducted research on CBDC for roughly five years before bringing out the first real-world trial of the currency in December 2019.

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The Turkish city of Konya is not the most
famous place when it comes to technology, and especially not when it comes to
emerging technologies — yet. The city, best known for being the country’s major
cultural center, offers rich history, as well as a lot to see. However, it also
decided to create its own Science and Technology Valley, under the guidance of
the Konya Science Center.

Its focus seems to be on blockchain
technology, and how it can be applied to municipal services. The plans were
originally revealed on January 16th, by Konya
Metropolitan Mayor Uğur İbrahim Altay. The mayor decided to propose the idea
during a smart city congress in Ankara. The project would also create a City
Coin, as well as an entire financial ecosystem around it.

The project is also specially focused on
social programs, according to details shared by Dr. Ali Osman Çıbıkdiken, who
acts as the head of the Konya Science and Technology Valley. Its goal is to
allow local governments to manage the reserve fund for social aid by using
blockchain technology.

It is unknown when the project might reach
completion, although the team aims to come up with a prototype in the next six
months. If this happens, the project could go live in about a year.

Turkey advances blockchain

Konya is a pretty large city, with a
population that exceeds 2.4 million. This is more than enough to test how
blockchain in public service might perform. Further, the city is also quite
advanced in terms of smart city applications.

A report published by the city’s Chamber of
Commerce reveals that there are over 10 smart city projects currently underway,
including a payment system that uses contactless credit cards for public
transport, as well as apps for e-municipality functions.

Konya is also not an isolated case, as the
entire country accelerated its efforts regarding the development and use of
blockchain infrastructure. It has plans to develop Digital Lira by the end of
2020, and it already saw the launch of the BiGa Digital Gold platform, by
Turkish Taskbank, among other projects.

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AB InBev, the company behind the Budweiser brand, is helping local African farmers to prove their income using blockchain, Yahoo Finance reports on Jan. 21. A blockchain-based system developed in partnership with BanQu tracks all the local suppliers of AB InBev, replacing the paper trail.

AB InBev is a multinational conglomerate born out of the merger of several established beer producers. It includes Budweiser, Stella Artois and Corona as some of its most recognizable brands.

The company has adopted a strategy of using local suppliers, receiving tax breaks for their added contribution to the country’s economy. However, this proved to be more challenging in Africa, a continent where banking infrastructure remains underdeveloped and paper documents are difficult to obtain for rural farmers. 

Partnering with BanQu, a company specializing in blockchain supply chain solutions, AB InBev introduced a distributed ledger system that tracks all the local farmers that supply barley and malt to the company. This allows them to prove their income to local banks, and thus open bank accounts and lines of credit.

The CEO of AB InBev, Carlos Brito, explained at the World Economic Forum in Davos:

“And now this farmer, who was never bankable — because she couldn’t prove income of any source, had no reports, or material or paperwork — now in a flip phone, she has in the blockchain proof that she is a supplier to AB InBev, a global company.”

Access to banking allows the local farmers to finance more efficient farming tools, increasing their yields and receiving more money. The system also helps to curtail corruption introduced by middlemen who consolidated the shipments to the breweries. 

Brito noted that they were “not necessarily passing the money we were paying to him or her to [the farmer].” A tamper-proof blockchain system ensures that the farmers are able to prove what they are owed. Brito further elaborated on the benefits of the system:

“They become commercial farmers and everybody wins. Consumers are safer and we create more formal jobs. The government collects taxes. Instead of sending the money to Europe, or Australia, or Canada buying barley or malt, we keep the money there.”

The BanQu product has reportedly been implemented with thousands of farmers across Uganda and also India.

Uganda is one African country where blockchain is taking hold. Binance opened a local branch in 2018, though the country’s central bank remains skeptical of decentralized cryptocurrencies.

Crypto-based Ponzi schemes are also present, with the Dunamiscoins pyramid recently defrauding over 10,000 users for $2.5 million.

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Custodian banks are facing a slew of challenges such as cost pressures, operational inefficiencies, and aging legacy applications. Disruptive digital technologies such as blockchain and distributed ledger technologies (DLT), Robotic Process Automation (RPA),
and intelligent automation systems such as cognitive computing tools and decision support systems using machine learning (ML) algorithms can help custodian banks address these challenges. This paper, the first of a two-part series, examines how blockchain
or DLT can be applied to specific service areas to help custodian banks transform their operations.

Technology Driving Change

Custodian banks are under pressure to offer competitive and cost effective services to their alongside tackling multiple challenges including a stringent regulatory regime, legacy systems, rising costs, and inefficient processes. Enhancing operational effciencies,
minimizing run-the-bank (RTB) costs, and improving customer experience are therefore top priorities for these banks, which is where disruptive technologies come in. Custodian banks are looking at leveraging DLT, RPA, and intelligent automation systems such
as cognitive computing and decision support systems using machine learning to reengineer business processes and simplify and modernize their application architecture.

DLT in Action

Complex hierarchical transaction processing between market participants can be eliminated by leveraging blockchain or DLT to enable more comprehensive, peer-to-peer, disintermediated interactions resulting in faster and cheaper transaction processing. Financial
institutions must consider private blockchain platforms with permissioned ledgers such as IBM Hyperledger, R3 Corda, or private version of EthereumTM (Quorum ) to enable faster adoption of this technology. The key advantages of using these products are features
like disintermediation and immutability or data integrity, as well as their inbuilt smart contract capability that enables further automation. Let’s examine the key areas where blockchain can deliver maximum advantage.

Reference data management

Market data providers supply reference data to custodian organizations. Each individual firm obtains and manages its reference data and enhances it with additional data inferred based on financial data received from other sources such as issuers and stock
exchanges. This results in inconsistencies in the reference data used by different market entities, which in turn causes transaction breaks that require significant reconciliation effort at a later date.

Blockchain solutions have the capability to enable the sharing of uniform reference data across all market entities in near real-time. Market participants can come together to form a common platform underpinned by blockchain technologies, wherein issuers
publish the securities reference data for the use of all the members. Subsequent changes or enhancement to reference data by individual custodians can be approved by the issuers. This will help create a single, golden source of reference data across multiple
market participants.

Collateral management

Custodians offer triparty collateral management services to their customers. Based on the service agreements submitted by the two counterparties, service providers create a master contract in their repositories, which is considered as the golden copy by
all concerned parties. Amendments to this master contract and associated sub contracts, if any, are also processed by the triparty service provider. The entire process involves substantial manual intervention, which in turn causes significant operational risks.

Moving to a blockchain platform can help address these challenges. The triparty collateral manager can provide a blockchain solution for counterparties to create the master agreements and associated sub-contracts, which can then be validated by the service
provider. The immutability feature of blockchain technology ensures data integrity of the master agreement. Amendments to the master agreement requested by either of the counterparties will be verified, reviewed, and approved by the other counterparty as well
as the service provider. A new version of the master agreement will then be created in the blockchain ledger. A key benefit of using blockchain for creating triparty collateral agreements is that it incorporates all the non-repudiated amendments besides enabling
a single, consistent view of the agreements for all concerned parties.

Cross-border collateral movement between counterparties may involve the exchange of collateralized assets between parties’ custodian accounts resulting in expensive settlement processes. Blockchain technologies can be used to address this wherein a custodian
in a participant’s home market will accept the collateral and issue equivalent virtualized tokens to the participant on the blockchain platform. The number of positions in each security for each participant will be recorded in the form of virtualized tokens
in the blockchain ledger. Consequently, participants’ collateral across different locations and Central Securities Depositories (CSD) will reflect as tokenized balances in a virtual collateral pool. The parties that need to provide collateral to their counterparties
can initiate a collateral movement request in the blockchain ledger, which results in the settlement of virtual tokens, while the underlying collateral assets can be locked by a trusted entity. The return of collateral can also be initiated in the same way,
with the trusted entity unlocking the collateral securities. Such a blockchain based solution has the potential to greatly reduce the movement of physical securities across accounts and borders.

Asset Servicing

Custodians receive corporate action (CA) announcements from different sources. After announcement scrubbing, the custodian creates a golden copy of the announcement. Also, custodians typically enrich the announcement with additional data points based on
market data, inferences from historical data, and so on, which translates into a huge and expensive cumulative effort. Since the entire process is manual, it is error-prone, which means that inaccuracies in the information fed in by custodians can have huge
implications for the execution of the CA resulting in significant financial risk.

Proxy voting and voluntary actions are processed hierarchically by issuers, CSDs, custodians, brokers, and investors. Consolidating these responses manually at each stage is time consuming and error-prone. Blockchain solutions can be used to make the voting
process fast and efficient. The issuer can create the voting event on a blockchain platform and assign the eligible quantity to the custodians. Custodians in turn can assign the eligible quantity to the participants. The sum of the quantities assigned to participants
would equal the cumulative eligible quantity. Participants can further be enabled to vote on the blockchain platform which means that all the stakeholders can view the voting progress and the statistics on the blockchain platform in real time. Processing voluntary
actions and proxy voting on a blockchain platform can deliver multiple benefits – complete elimination of error-prone, manual consolidation efforts at multiple stages, reduced costs, and significant time saves.


Reconciling positions between custodians, depositories, and other foreign sub-custodians entails huge manual effort, which can be eliminated by sharing position updates between custodians and depositories through a blockchain ledger sponsored by the depository.
The depository would update the position balances in the blockchain ledger and require custodians to review and acknowledge the updates. Such a solution will provide a real-time view of the position balances to custodians and depositories, while eliminating
the need for time-consuming and expensive manual reconciliation processes.

Looking Ahead

Custodian banks must leverage the wider ecosystem consisting of sell-side and buy-side firms, market infrastructure firms, as well as competitors, and tap into their capabilities and resources to build advanced blockchain platforms. By creating a common
platform that all the players can access, the total cost of ownership (TCO) will reduce drastically as individual firms will be saved the expense of managing standalone applications independently. This will help unlock exponential value for custodian banks
as well as other ecosystem players. However, care should be taken to choose only those use cases for blockchain adoption that have true transformation potential and the ability to deliver noteworthy productivity gains and returns on investment. Several leading
blockchain players are preparing to launch enterprise-grade blockchain platforms and custodian banks would do well to capitalize on the opportunity and adopt this disruptive technology to reimagine custodial operations.

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