BNY Mellon says that a blockchain event at its campus in Jersey City, New Jersey, on January 28 attracted only a small number of attendees, but it argues that it could have a huge impact on how the bank does business in future.
During remarks before the presentation, BNY Mellon Chief Information Officer Suresh Kumar argued that rather than being replaced by the technology, blockchains can help institutions like BNY Mellon pursue new lines of doing business.
During his opening talk, Tim Swanson, Director of research for New York-based blockchain startup R3CEV, provided an overview of the R3 blockchain consortium, which boasts 42 banking institutions from Asia, Europe and North America, including BNY Mellon, as members.
Swanson outlined how the firm is pushing ahead on development of a “financial-grade ledger”, as well as the creation of collaborative working spaces for financial institutions to test blockchain products and possible use cases.
Houman Shadab, Professor and Co-director of the Center for Business and Financial Law at the New York Law School, gave a broad overview of the regulatory landscape in the financial industry, establishing that environment as context for how distributed ledgers could be deployed within existing legal frameworks for banks.
Shadab stressed that banks, when looking at possible development of a distributed ledger for a certain aspect of their business, need to weigh every angle of how such use would play out in the real world. “If we install a distributed ledger here, what do I need to do to effect a certain activity, a certain trade?” he said.
The last presentation focused largely on the legal risks involved with using distributed ledgers, particularly when it comes to the question of establishing ownership of a particular asset. Barney Reynolds, Chief of the Global Financial Institutions Advisory & Financial Regulatory Group for London-based legal firm Shearman & Sterling, called ownership a “massive problem” that could lead to issues that end up in a court, or in courts in multiple legal jurisdictions. “The question is, where is the asset?” he asked. “If it’s in the ether, there is insufficient clarity for the law to determine that question.”
Reena Sahni, a Partner with the Shearman and Sterling legal group, went on to say during a question-and-answer follow-up that a solution would lie in creating a clear legal framework for establishing how property ownership is managed within a blockchain system.