Morningstar Develops Blockchain Platform for Debt Securities

Published at: Oct. 2, 2019

The credit rating arm of financial services giant Morningstar is developing a blockchain platform for the $117 trillion debt securities industry.

Morningstar Credit Ratings is building an evaluation system for debt securities issued as tokens on a blockchain, Forbes reports on Oct. 2.

Michael Brawer, COO at Morningstar Credit Ratings, stated that the firm is working with a number of blockchain-oriented firms who are seeking to issue debt instruments on a blockchain. 

According to Forbes, Morningstar rates a wide range of assets based on their past returns to investors on a scale of one to five. The company reportedly started working with blockchain technology in June 2018, when Morningstar published a report on how firms like Bank of America, Apple and Walmart are using blockchain tech, and how it might affect credit ratings agencies’ coverage.

Two major blockchain efforts in debt securities

So far, Morningstar has been working on two major blockchain-based efforts in the debt securities industry. One of them intends to put Morningstar’s system for rating bonds directly on the Ethereum blockchain via a technology called an oracle, the report notes. 

Oracles move data onto a blockchain in a way that ensures the data is not manipulated and therefore makes it eligible to be used in a smart contract.

The second project involves making quantitative rating models for debt securities available on a blockchain. Credit agencies use said models to determine the creditworthiness of different types of debt securities.

According to Brawer, the smart oracles project could be ready as soon as the end of 2019, but the blockchain modeling project might not be ready for launch until the end of 2020.

The potential partners for Morningstar’s product reportedly include blockchain-focused startup Figure, Coinbase-backed alternative investment provider Cadence and decentralized finance platform Polymath.

Meanwhile, it is still unclear whether Morningstar’s blockchain methodology needs to be approved by the United States Securities and Exchange Commission (SEC), the report notes. Brawer said that there is a very elaborate and intricate governance process which is all based on the Dodd-Frank law and SEC regulations.

In July, blockchain-based alternative investment provider Cadence launched an investment platform for debt.

Tags
Adoption
Blockchain
United States
Cryptocurrencies
Loans
Finance
Related Posts
Dress to impress: Crypto payments set for mainstream via compliance
Mainstream interest for cryptocurrency is becoming ever-apparent as major online payment systems such as PayPal begin to offer support for digital currencies. While a revolutionary step for both the crypto and traditional finance spaces, meeting regulatory requirements is crucial in order for such companies to support cryptocurrencies. This year, PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, allowing for the purchase of Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC). On the surface, it would appear that PayPal has undergone the basic requirements to support digital currencies. However, what’s really …
Adoption / Nov. 19, 2020
Russian Finance Ministry Considers EAEU Digital Currency ‘Inevitable’ Due to US Sanctions
Russia's Ministry of Finance (MinFin) believes that the creation of a Eurasian Economic Union (EAEU)-backed digital currency is inevitable due to the United States’ sanctions. Major Russian media agency Rambler reported MinFin’s comments on Friday, Dec. 21. MinFin reportedly sees an opportunity for launching a digital currency backed by countries in the EAEU by 2020 or 2021, as deputy finance minister Alexei Moiseev revealed. The Eurasian Union was established in 2014 and includes five member countries: Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan. The announced digital currency project will be most likely implemented without using blockchain technology, Moiseev stated, as reported …
Adoption / Dec. 21, 2018
Number of Americans Owning Crypto Doubled in 2019: Finder
The number of Americans who own cryptocurrencies has almost doubled in 2019, from 7.95% in 2018 to 14.4%, according to a new survey by Finder. 36.5 million Americans own crypto Finder, an Australia-based financial services firm, has surveyed 2,068 Americans to figure out that 36.5 million people in the United States own some form of crypto to date. Titled “A rising number of Americans own crypto,” the survey was released on Oct. 14, as Finder tweeted. Average $5,447 holdings versus $360 median amount According to the survey, the average amount out of the totally owned crypto by Americans accounts for …
Adoption / Oct. 24, 2019
Crypto Bahamas: Regulations enter critical stage as gov't shows interest
The crypto community and Wall Street converged last week in Nassau, Bahamas, to discuss the future of digital assets during SALT’s Crypto Bahamas conference. The SkyBridge Alternatives Conference (SALT) was also co-hosted this year by FTX, Sam Bankman-Fried’s cryptocurrency exchange. Anthony Scaramucci, founder of the hedge fund SkyBridge Capital, kicked off Crypto Bahamas with a press conference explaining that the goal behind the event was to merge the traditional financial world with the crypto community: “Crypto Bahamas combines the crypto native FTX audience with the SkyBridge asset management firm audience. We are bringing these two worlds together to create a …
Adoption / May 3, 2022
Prep time with Bitcoin: Students have fun new ways to study crypto
“Bitcoin” had been an unfamiliar term to many individuals just a few years ago. While cryptocurrency continued to enter the mainstream, Bitcoin (BTC), Ether (ETH) and other digital assets were being discussed more frequently. Recently, “Bitcoin” searches across Google hit a record high in 2020, and “Buy Crypto” searches surged for the first time at the beginning of this year, further demonstrating the mainstream interest. It's also important to note that Bitcoin and cryptocurrencies in general have been gaining traction with the younger generations. For instance, a number of television shows for youngsters have started mentioning Bitcoin. Most recently, the …
Adoption / April 6, 2021