Will blockchain play a role?

BlackRock and Citadel Securities have invested in a group aiming to disrupt the US stock market.

Texas Stock Exchange Chairman and CEO James H. Lee is touting $120 million from more than 24 investors to potentially launch an exchange to rival the NYSE and Nasdaq. The consortium of investors includes the world’s largest asset manager, BlackRock, and giant market maker Citadel Securities.

TXSE Announcement | Source: LinkedIn

Are BlackRock and Citadel planning a blockchain move into stock markets?

According to the Wall Street Journal, the TXSE presents itself as a challenge to the hegemony maintained by traditional and perhaps obsolete stock exchanges. The group also wants to address rising compliance fees and listing costs.

While neither BlackRock nor Citadel have indicated a cryptocurrency-related strategy with investing in TXSE, blockchain technology could be a working solution to the agenda set by Lee’s group.

Blockchain networks are known to operate energy-efficient models compared to the traditional financial sector. Naysayers and non-believers have scrutinized Bitcoin (Bitcoin) proof-of-work (PoW) structure over the years as energy-intensive, but the data disagrees.

A Galaxy Digital report from 2021 cited from Nasdaq stated that Bitcoin consumes less than 50% of the energy used by banking systems. Whereas major altcoin blockchains such as Ethereum (ET) and Solana (SOL) employ a more energy-optimized structure with Proof-of-Stake (PoS), decentralized chains may incur operational costs for TXSE.

Introducing on-chain mechanics to the world’s largest capital market could also unlock access to 24/7 trading and instant settlement. The stock market only operates five days a week. Anyone around the world can buy BTC, ETH or SOL whenever they want, as long as the uptime of the chain remains uninterrupted.

Bitcoin, in particular, does not expert downtime in over a decade, and Ethereum is arguably the most trusted blockchain for Defi, with over $66 billion in total value locked for DefiLlama. Tokenization The number of real-world assets such as bonds and stocks has also skyrocketed in recent years to a $9.4 trillion market and continues to grow, indicating that it is possible to carry stocks and other securities.

Market capitalization of tokenized real assets | Source: CoinGecko

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