The CME Group held its annual Tech Talk for the first time in London. The CME group is one of the largest derivative exchanges in the world. It trades derivatives based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, rare and precious metals, weather, and real estate. The conference was about technology in financial services, from the more mundane cloud computing challenges with regulators, to the more esoteric upcoming role of quantum computers.
Not surprisingly, the conference also had a slot for discussing blockchain. Surprisingly, however, unlike some other major financial industry companies, the CME group is clear about the two trends – blockchain/distributed ledger technology (DLT) and ‘digital assets’. Sandra Ro, who heads the digitization group at CME, spoke about the group’s humble beginnings while maintaining throughout that she sees a lot of potential for digital assets, with Bitcoin being the largest one at the moment.
She discussed CME group’s philosophy on projects and proofs of concepts in this space, with the goal of failing fast with proofs of concepts, but investing time, money, and effort into the projects that yield promise and potential. She said the group looks at projects on a scale of 3-5 years.
The most interesting part of her talk was around what she considered a trend that will accelerate in the future – the combination of digital assets (like Bitcoin and Ethereum) with tokenized fiat and commodities. She said several groups are already working on the tokenization aspect, and combined with cryptocurrencies, they may open up a whole new market. She did say that most of these are experimental at this stage, so there is a high likelihood of failure, but she sees the trend continuing and accelerating in the future.
On the topic of Bitcoin ETFs, Ro said that the very fact that two different entities have now filed for regulated exchange traded products for Bitcoin means there is enough demand from investors for such a product. She sees this to increase in the future, and expects more regulated products in the digital assets space.
Ripple presented an idea of ‘Interledger’, pitching it as ‘beyond blockchain’. There were scant technical details, but the project gist was around making different banks around the world using different ledgers and technologies essentially talk to one another. Ripple said they are not using a blockchain for this purpose. It was unclear how this works behind the scenes, or how this concept is different from the existing solutions. Interledger is still supposed to maintain some of the features of blockchains, like cryptography (but again, not too many details).