After a long development period of seven years, the Australian Securities Exchange (ASX) has decided to abandon its plans to incorporate blockchain technology or distributed ledger technology (DLT) into their existing Clearing House Electronic Subregister System (CHESS). According to a Reuters report from May 17th, ASX exchange project director Tim Whiteley mentioned that traditional technology solutions might be more suitable for achieving their desired business outcomes. The ASX, with a market capitalization of over $2.5 trillion and over 2,200 firms listed, intends to adopt a new strategy by the end of the year.
Continuing their exploration of potential technological solutions, the ASX has requested proposals and further detailed feedback from potential software vendors. In partnership with New York-based Digital Asset Holdings, ASX had been developing a permissioned enterprise blockchain, accessible only to approved participants. The initial motivation to incorporate blockchain technology came from the anticipation of multiple benefits, which included increased efficiency, reduced costs, improved security, and enhanced transparency.
However, despite successful prototypes and extensive testing, the blockchain initiative has faced multiple challenges and delays. The project experienced several pushbacks regarding its expected launch date. As the overhaul of the CHESS system was paused in November last year, an independent report by Accenture found significant challenges in the solution designs’ ability to meet ASX’s requirements.
The ultimate decision to abandon the project came after this revelation, along with a pre-tax loss of approximately $170 million (~$255 million AUD) incurred by the now-abandoned blockchain initiative, which the company reportedly had to write off. The ASX will now continue searching for a more conventional technological solution that best meets its requirements.
Despite the ASX’s decision, other companies and institutions worldwide are still looking to blockchain technology for financial innovation and developmental progress. The applications of blockchain extend far beyond cryptocurrencies like BTC and ETH, as the underlying technology has the potential to disrupt traditional systems in various industries.
However, the ASX’s exploration of blockchain and subsequent abandonment of the project highlights that, in some cases, this ground-breaking technology may not always be the best solution. While some argue that conventional technologies may be more suited to particular circumstances, others claim that the adoption of blockchain could simply require overcoming some initial barriers. The debate continues as the community of crypto enthusiasts tries to weigh the pros and cons of this innovative technology across different use cases.
Source: Decrypt
