Contents
European Union Report Explores Permissionless Blockchain Potential in Traditional Finance
Author’s Analysis of Permissionless Blockchains in Traditional Finance
Fabian Schär Advocates Caution in Adopting Permissionless Blockchains
An in-depth report released by the European Union delves into the potential use of permissionless blockchains in traditional finance (TradFi) and financial market infrastructures. The report, authored by Fabian Schär of the University of Basel, suggests considering permissionless blockchains as viable options for TradFi, albeit with a cautious approach.
Schär, known for his research in Decentralized Finance (DeFi), emphasizes the neutrality and competitive edge that public blockchains can offer compared to private ones. While acknowledging the challenges of public blockchains, such as scalability and governance, the report points out various workarounds to address these issues.
Benefits of Permissionless Blockchains in Interoperability
Enhancing Composability and Functionality Across Blockchains
The report highlights how permissionless blockchains can serve as an interoperability layer for different blockchains, enabling smart contracts to be more easily composed for complex functionalities. While acknowledging the current limitations of cross-chain composability, the report underscores the importance of addressing this aspect in the financial sector.
Policy Implications and Regulatory Changes
EU DLT Pilot Regime and Basel Committee Guidelines
The EU DLT Pilot Regime, implemented in early 2023, relaxes regulations for central securities depositories and allows the use of permissionless blockchains. This initiative, alongside the ongoing debate by the Basel Committee on Banking Supervision, signals a shift in regulatory attitudes towards permissionless blockchains in financial markets.
For a comprehensive understanding of the role of permissionless blockchains in TradFi, the EU report provides valuable insights and technical analysis that address key concerns in the industry.
The information in the article is for informational purposes only. It does not constitute any investment advice. The author and CryptoBlockNews.com are not responsible for your profits or losses arising from your investments. Investment is ultimately based on many foundations such as knowledge, accumulation, experience, research and personal decisions.
