A blame exchange has ensued between Digital Asset and the Australian Securities Exchange (ASX) over the latter’s defunct blockchain-centric clearing system upgrade. While the New York-based firm, Digital Asset, implicates the ASX in the debacle, the ASX refutes these allegations, terming them as misconstrued.
ASX was on track to become a trailblazer in the world of securities exchanges, poised to be the first to adopt blockchain technology in conjunction with Digital Asset. However, a shift in direction led to ASX ditching the blockchain upgrade, as announced on May 17, possibly in favor of more traditional tech solutions.
During a parliamentary joint committee meeting on corporations and finance on June 8, Eric Saraniecki, co-founder of Digital Asset, laid out two key reasons behind the failure of the blockchain upgrade. First, he accused the ASX of withholding critical test data necessary for Digital Asset to adequately evaluate the new system. Saraniecki stated, “Their reluctance to share the data hampered our ability to design a system that could meet their full requirements.”
The second point of contention, according to Saraniecki, was that while ASX publicly advocated for a radical overhaul of its almost three-decade-old CHESS platform, they were simultaneously instructing Digital Asset to retain obsolete elements of the old system. This dual messaging contributed to the ensuing discord and subsequent collapse of the upgrade.
In rebuttal, David Curran, non-executive director at ASX, pointed to communication lapses on Digital Asset’s part. Curran insisted that he had unequivocally conveyed to Digital Asset that if any concerns were present, proper channels were in place to address them.
ASX’s CEO, Helen Lofthouse, pointed to the “rigid requirements” of the pre-existing system and their relation to Australian settlements as the real culprits for the project’s woes. Lofthouse explained that the original solution design failed to meet market requirements and lacked the desired flexibility.
Despite reports suggesting the absolute abandonment of blockchain technology by ASX, their chief information officer, Tim Whiteley, clarified that no definitive decision had been taken. The exploration of alternatives for the solution design is still underway.
This controversy showcases the challenges in adopting emerging technologies like blockchain in established industries. It is a lesson for businesses contemplating similar digital transformations, highlighting the importance of clear communication, consensus on objectives, and a thorough understanding of how legacy systems interact with new technology. Businesses need to conduct comprehensive due diligence and testing before such a significant shift, ensuring that the change can meet both current market requirements and future operational needs.