Blockchain Identified as a Systemic Threat for the Global Financial Sector Per New DTCC Report
This year’s report by The Depository Trust & Clearing Corporation or DTCC recognizes blockchain technology as a potential threat to the global financial industry.
“[T]he DTCC Systemic Risk Barometer Survey serves as an annual pulse check to monitor existing and emerging risks that may impact the safety, resiliency, and stability of the global financial system. It is designed to help identify trends and foster industry-wide dialogue on potential threats to financial stability.”
The report goes on t say that the Mt. Gox hack in 2013, things kept getting worse for cryptocurrencies and the blockchain ecosystem with an increasing amount of hacks which was directly responsible for price volatility.
“The increase in concern around fintech’s impact on systemic risk demonstrates a growing awareness of the potential risk and highlights the need to evaluate both risks and rewards associated with fintech initiatives. DTCC embraces the promise that fintech innovations hold to further mitigate risk and reduce post-trade costs. But as the industry continues to adopt fintech innovations, like blockchain, AI and cloud solutions, we must ensure that those innovations do not jeopardize the safety and security of the current global financial marketplace,” said Stephen Scharf, the DTCC ‘s chief security officer, in a statement.
Almost 20% of all respondents recognized the broader fintech category as a potential systemic risk in 2019, an increase of 5% over the previous year. Respondents were asked to identify the top five systemic risks they saw to the broader economy.
In the report it was revealed that cyber-risk was at the top of the list with 69% of respondents picking it as a concern; geopolitical risks and trade tensions, cited by 55% of respondents; Brexit was cited by 49% of respondents; and excessive global debt and the impact of new regulations, cited by 28% of respondents.
DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers, and offices in 16 countries, DTCC, through its subsidiaries, automates, centralizes and standardizes the processing of financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm simplifies the complexities of the clearing, settlement, asset servicing, data management, and information services across asset classes, bringing increased security and soundness to financial markets.