Bitcoin Startup To Provide Blockchain Tech For Nasdaq Private Market

The partnership with the bitcoin startup comes a month after Nasdaq originally announced plans to pilot blockchain tech for their private market. In May, the exchange said their first blockchain application would be aimed at improving the accuracy of their record keeping. The application would be complementary to their existing cloud-based private equity management solution, ExactEquity.

“As blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole, Nasdaq aims to be at the center of this watershed development."
— – Bob Greifeld, Nasdaq CEO

"We are excited about the potential impact of this new endeavor with Chain on the transaction process," said Bob Greifeld, Nasdaq CEO. "This Nasdaq Private Market project aims to simplify the overwhelming challenges private companies face with manual ledger record-keeping.”

According to a press release by Nasdaq, the blockchain will be used “to represent and manage capitalization tables, stockholders can seamlessly transfer securities between entities, and companies and their affiliates can be provided with a complete historical record of issuance and transfer of their securities.” The release added that the technology will also add transparency and security, by offering a traceable history of the assets and the ability to do audits.

"Utilizing the blockchain is a natural digital evolution for managing physical securities," said Greifeld. "Once you cut the apron strings of need for the physical, the opportunities we can envision blockchain providing stand to benefit not only our clients, but the broader global capital markets."

"Nasdaq’s technology and thought leadership in creating new, dynamic markets will carry over into the blockchain space in truly disruptive ways."
— – Adam Ludwin, Chain CEO

In the Nasdaq press release, Chain was described as the general blockchain company they will be working with, meaning Nasdaq could be open to working with multiple bitcoin startups, or might have plans to explore other blockchain use cases with different startups.

"Chain is thrilled to be working with Nasdaq on blockchain initiatives which will reduce the time, costs, and points of friction across the capital markets."
— – Ludwin

Chain is one of the few companies with experience integrating the colored coins technology the pilot program will be using, Open Assets. At the recent Money 20/20 conference, the startup announced that they were working with online gift card retailer, Gyft, to develop a gift cards issued and sent through the bitcoin blockchain.

Other implementation of the open assets protocol include a recently announced project by colored coins development company ChromaWay and Estonian bank LHV, who are building a financial platform using the bitcoin blockchain. The bank reportedly issued €100,000 worth of insurance securities on the blockchain, making them the first bank to ever do so.

LHV is building the platforms technology through their subsidiary, Cuber Technology. While currently in beta testing, the Cuber Wallet uses blockchain technology, allows users to send euros for free, and allows merchants to accept digital payments without having to pay credit card fees.

According to  Rain Lõhmus, CEO of Cuber Technology, the blockchain is a crucial tool for the bank to modernize and streamline the financial industry. The bank will be releasing an API and encouraging other banks and fintech startups to build on top of it.

According to Nasdaq, the partnership with Chain marks the last milestone in their “exploratory approach to apply blockchain technology across the company,” and that users can expect the new technology to live later this later this year, though they did not give an exact time.

"We are always looking at new ways to leverage technology to provide client-centric solutions," Greifeld stated. "Our initial application of Nasdaq’s blockchain technology-enabled offering will modernize, streamline and secure typically cumbersome administrative functions, and will simplify the overwhelming challenges private companies face with manual ledger record-keeping."