Bringing Crypto Infrastructure Tech to Wall Street

Bringing Crypto Infrastructure Tech to Wall Street

According to cryptocurrency infrastructure provider Symbiont, Wall Street is already leaning heavily towards crypto and adoption is just beginning.

Symbiont was founded in 2013 and launched its first enterprise blockchain product, Vanguard, in 2019. The product enables smart contracts to handle data normalization for Vangaurd's passive index funds, allowing orders to be executed autonomously.

Symbiote Currently, Vanguard manages about $2.3 billion of the value of the passive indexes through this network, said Mark Smith, CEO of Symbiont.

“We view the technology as a toolkit to solve existing problems,” Smith said.

“From day one it has really been a question of how do we use this technology in an appropriate way so that regulated companies can use it in a compliant way.”

The crypto infrastructure provider is also working with other big names on Wall Street, including Citigroup, Nasdaq and Franklin Templeton Investments, and hopes for more collaboration opportunities in the future, Smith said.

In its most recent partnership, Symbiont worked with Vanguard and State Street to integrate smart contracts into traditional financial transactions.

“We were at the forefront from an enterprise blockchain perspective, looking at blockchain smart contract technology as tools to solve real-world problems in regulated financial markets,” Smith said.

Vanguard and State Street now use Assembly, Symbiont's distributed ledger technology, in the margin calculation process for a live trade of a 30-day foreign exchange futures contract.

Vanguard, as a global asset manager, has many international funds, which means that Vanguard must have the available foreign currency at a specific date and time to process these transactions. To hedge against the risk of the time frame in which Vanguard must settle in a foreign currency, the firm enters into forward contracts or swap contracts.

With Assembly, Vanguard and State Street acting as the bank's counterparty, the transactions can be negotiated in a secure, encrypted manner over the blockchain, Smith said.

“The smart contract calculates exactly how much collateral you need based on a calculation of the initial margin agreed between the two counterparties,” Smith said. “In the past, each side calculated the margin itself and then manually reconciled overnight or every two days to determine whether both sides received the correct margin variance calculation.”

Symbiont and other infrastructure companies are having a hard time keeping up with growing interest in crypto from financial institutions, Smith said.

“The demand has actually exceeded expectations, not just from Symbiont's perspective, but I think if you look at the other players in the market, they all want to expand,” he said. "Now the question is how do these entities come on board and become customers. That's the next phase where enterprise blockchain starts to really take off in these applications."

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The article Bringing Crypto Infrastructure Tech to Wall Street is not financial advice.