The Australian Securities Exchange (ASX) has recently made the decision to move away from its plans to rebuild its software platform using blockchain technology, demonstrating a significant departure from the once highly-praised concept that gained recognition through its association with cryptocurrencies. After seven years of development, an external review determined that significant rework was required, leading to a “pause” in the project back in November.
As a result, the ASX is now exploring alternative strategies for revamping their 30-year-old software, and during a recent meeting with participants, it was revealed that the company has chosen not to pursue blockchain or related distributed ledger technology (DLT). This marks the end of a project that was anticipated to be one of the most notable examples of a system designed to expedite online transactions through secure processing across multiple locations.
During the same meeting, ASX exchange project director, Tim Whiteley, indicated that a more conventional technology approach would likely be necessary to achieve the desired business outcomes. ASX had previously intended to be the world’s first securities exchange to adopt blockchain technology for its core services through a partnership with New York-based contractor, Digital Asset. ASX even purchased a small stake in Digital Asset after engaging their services in 2016.
Whiteley informed participants at the meeting that ASX is making progress towards finalizing a new strategy by the end of the year. The company has already issued a request for information to potential software vendors and a request for proposal (RFP) to those that expressed more positive interest, seeking more in-depth feedback.
This shift in strategy comes as market participants expressed their preference for a less risky approach, avoiding a sudden transition to new software on a single date. Whiteley acknowledged this preference and confirmed that such feedback is being considered during the implementation planning process.
While the decision not to use blockchain technology may be seen as a setback for the industry, it highlights the ongoing uncertainty around the adoption of this technology in the world of securities exchanges and its potential drawbacks. Crypto enthusiasts have long praised blockchain’s abilities, but this incident showcases the importance of balancing innovation with practicality within the industry.
In conclusion, the ASX’s decision to abandon its blockchain-based software rebuild underscores the need for careful consideration when implementing new technologies. While blockchain has been celebrated for its potential to revolutionize digital transactions, it is crucial to weigh its potential benefits with the challenges it may present when integrating it with existing systems and meeting the unique requirements of each market participant.