LSE sells technology to Hong-Kong-based cryptocurrency exchange
|- Traditional exchanges seize investment opportunities offered by the crypto industry.
- The development confirms the merge between traditional and innovative exchanges.
The London Stock Exchange jumps to the cryptocurrency bandwagon by agreeing to sell the part of its technology to a Hong Kong-based digital asset exchange AAX, the Financial Times reports.
The sale is regarded as a positive development for the industry plagued by security and regulatory issues. These concerns are often viewed as critical hurdles for the acceptance by institutional and traditional investors.
In 2018 only over $24B of venture capital was invested in crypto-related assets, according to Autonomous Research. Thus, the underlying blockchain technology and a scale of investments poured into the industry in recent years open up opportunities for traditional stock exchanges.
“If you look at the traditional market, there is a limited number of traditional exchanges. But there are many crypto exchanges springing up.” Lorne Chambers, global head of sales and marketing at LSEG Technology, commented.
Several other digital asset exchanges have bought technology from the traditional side of the market. For example, cryptocurrency exchange Gemini agreed to acquire market surveillance technology from Nasdaq last year.
Meanwhile, AAX is not the first digital asset trading platform buying technology from traditional rivals. Thus, the US-based Gemini acquired market surveillance technology from Nasdaq.
Blockchain companies also develop systems and technical solutions for traditional exchanges. For example, Digital Asset is creating a new post-trading system for the Australian Stock Exchange.
“I think the trend is now a two-way street between crypto exchanges trying to leverage or purchase expertise from established exchanges in the non-crypto space, and established exchanges partnering with crypto expertise to leverage the underlying blockchain technology for the traditional securities space,” according to Etelka Bogardi, a partner at Norton Rose Fulbright in Hong Kong.
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