Is Institutional-Grade Blockchain Ready for Its Great Leap Forward?

Early in the last decade, as bitcoin was pulling into its orbit an anti-establishment subculture that was suspicious of traditional finance, a few TradFi thought leaders began to contemplate the disruptive implications of the cryptocurrency’s underlying processing infrastructure.

By design, bitcoin and its self-governed distributed ledger technology (DLT) were poles apart from the highly controlled, tightly risk-managed networks on which banks, other financial institutions and governments relied for payments, securities transfers and other transactions and data transmissions.

Yet DLT – also known as blockchain – was seen as potentially adaptable to the critical payment, clearing and settlement functions assigned to established financial market infrastructures (FMIs), foremost among them Depository Trust & Clearing Corp. (DTCC). The U.S.-based post-trade utility was among the first entities of its kind to test and invest in blockchain projects and proofs of concept.

Major exchange and clearinghouse companies followed suit, as did top asset servicers and custodians such as Bank of New York Mellon, BNP Paribas, Northern Trust and...