Moody’s: Blockchain Technology Poses Systemic Risks


Moody’s (MCO), a business and financial services company that provides ratings across a number of financial products, recently published a report on the impact of blockchain technology.

In the report, which was first covered by FN London, Moody’s emphasizes how blockchain technology can make securitized trades more efficient and lucrative, but not without inherent risk.

“New key transaction parties will be introduced to the process, namely the entities that serve as developer, provider and operator of a blockchain,” states the report. “They may be either closely linked or identical with the originator, or independent third-party service providers, which could lead to a certain degree of counterparty concentration risk.”

This essentially means that Moody’s is concerned that if too many financial service providers and other companies adopt a single blockchain platform, there is a risk of the larger financial system being seriously impacted by a single point of failure.

Other cited risks include IT and operational risks, inappropriate blockchain governance and legal and regulatory issues, all of which could significantly hamstring a company if they chose to adopt a private blockchain platform for major business operations.

As we previously reported, a number of major corporations are already using blockchain technology, with major platforms like Hyperledger Fabric becoming a favorite among enterprises.

More: Moody’s warns blockchain may pose systemic risk to structured finance

Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.

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