ASX divests ownership in Digital Asset, a tech firm based in Canton
In the rapidly evolving world of financial technology, Digital Asset, a company renowned for its blockchain solutions, has been making strides in various sectors. One of its significant achievements is operating an intraday repo platform for Broadridge, processing approximately $1.5 trillion monthly.
However, Digital Asset's journey has not been without its challenges. One such instance involves the Australian Securities Exchange (ASX) and its six-year project to replace its post-trade system, CHESS, using blockchain technology. Despite the project's ambitious goals, it was paused and subsequently abandoned in 2021, with the ASX writing off A$250m ($164m) spent on the project.
The CHESS project's issues culminated in an announcement by the Australian Securities and Investments Commission (ASIC) this morning, citing "repeated and serious failures" in governance, capability, and risk management. Accenture, which was hired to review the project, concluded it was 63% complete but expressed concerns about the complexity of the CHESS project's architecture.
Despite these setbacks, Digital Asset has managed to secure significant investments, raising a total of $315 million, with the most recent investment of $120 million coming in 2021. The company boasts a list of blue-chip backers, including Accenture, Citi, Goldman Sachs, IBM, JP Morgan, and many others.
Digital Asset's technology has successfully launched several projects, including systems for at least two other stock exchanges - Deutsche Börse's D7 digital securities platform and a solution for HKEX. Although specific updates on these collaborations are not detailed in recent sources, Deutsche Börse has been actively using the D7 platform for digital securities issuance.
Meanwhile, HSBC has been active in digital bond issuances using blockchain technology via its Orion platform. On September 26, 2024, HSBC issued a digital note using DLT (Distributed Ledger Technology), indicating ongoing activity in this area.
The events surrounding the CHESS project have increased scrutiny of ASX's project management and governance. The ASX sold its equity investments in the project's developer Digital Asset for A$57m ($37m) to unnamed investors, resulting in a roughly 20% profit. However, the broader implications for the fintech industry's approach to digital asset management platforms remain to be seen.
[1] https://www.finextra.com/newsarticle/36669/hsbc-issues-first-digital-bond-using-dlt-technology [2] https://www.finextra.com/pressarticle/88476/deutsche-boerse-and-digital-asset-to-collaborate-on-tokenized-asset-platform [3] https://www.finextra.com/pressarticle/89689/deutsche-boerse-launches-digital-securities-issuance-on-d7-platform
- Despite setbacks in a project with the ASX, Digital Asset has continued to embark on numerous collaborations in the finance industry, such as launching systems for Deutsche Börse's D7 digital securities platform and a solution for HKEX.
- In contrast to the abandoned CHESS project, Digital Asset has been able to secure significant investments, totalling $315 million, with the most recent injection of $120 million coming in 2021.
- As technology evolves, industry players like HSBC are utilizing blockchain technology for digital bond issuance, such as the digital note issued via its Orion platform on September 26, 2024.
- Insights from the CHESS project have highlighted the importance of strong project management, governance, and risk management in the development and implementation of Central Bank Digital Currencies (CBDCs) and digital asset management platforms within the financial technology sector.
