WASHINGTON–The Chamber of Digital Commerce, a trade association representing the blockchain industry, and the Structured Finance Industry Group (SFIG) have announced the formation of a strategic partnership focused on advancing the use of blockchain technology in securitization markets.
The two organizations said the partnership will commence with the publication of a co-sponsored white paper titled, "Applying Blockchain in securitization: Opportunities for Reinvention," as well as a series of educational activities at a recent industry event.
According to the two organizations, the goal of the partnership is to bring the structured finance and blockchain communities together. The two organizations also said they collaborate on research efforts and publications, joint educational programs and online forums.
“In addition to a detailed examination of how blockchain can play a role at each stage of the securitization lifecycle, the white paper, prepared by Deloitte, outlines five distinct benefits for blockchain in structured products: Single, consistent source of information - blockchain enables a single, consistent source of information for all participants in the network,” the organizations said in a statement.
Among the benefits of blockchain, the organization stated:
- A complete, immutable audit trail. From loan origination to primary issuance, servicing, and changes in ownership in the secondary market, blockchain can create a chronological and immutable audit trail of all transactions.
- Better valuation and price discovery. The transparency facilitated by blockchain technology could reduce the information asymmetry and network disadvantages that some entities, especially smaller ones, currently face in the securitization industry.
- Speed and certainty. Blockchain technology, through its disintermediation and simultaneous recording of information across the system, can virtually eliminate time lags in information and payment flows throughout the securitization process, including in the secondary market.
- Security. Blockchain's capacity to increase the security of transactions and data, and mitigate fraud could be appealing to the securitization industry, where integrity of data is paramount.