will blockchain play a role?

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

James H. Lee, president and CEO of the Texas Stock Exchange, boasts a $120 million war chest from more than 24 investors with the potential to build an exchange that could rival the NYSE and Nasdaq. The consortium of investors includes BlackRock, the world’s largest asset manager, and giant market maker Citadel Securities.

TXSE announcement | Source: LinkedIn Are BlackRock and Citadel planning blockchain moves in stock exchanges?

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to The Wall Street Journal, TXSE sees itself as a challenge to the hegemony maintained by traditional and perhaps outdated exchanges.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

While neither BlackRock nor Citadel has outlined a crypto-related strategy with its TXSE investment, blockchain technology could be a solution that fits the agenda put forth 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 the energy-intensive proof-of-work (PoW) nature of Bitcoin (BTC) over the years, but the data disagrees.

A 2021 Galaxy Digital report cited by Nasdaq stated that Bitcoin consumes less than 50% of the energy used by banking systems. Considering that top altcoin blockchains like Ethereum (ETH) and Solana (SOL) use a more energy-optimized structure with proof of stake (PoS), decentralized chains could create operating costs for TXSE.

Introducing on-chain mechanisms to the world’s largest capital market could also unlock 24/7 trading access and instant settlement. The stock market operates only five days a week. Anyone anywhere in the world can buy BTC, ETH or SOL at any time, provided the chain operates uninterrupted.

Bitcoin, in particular, has not experienced an outage in over a decade, and Ethereum is arguably the most trusted blockchain for defi, with over $66 billion in total value locked per DefiLlama. Tokenization of real-world assets such as bonds and stocks has also rapidly reached a $9.4 billion market in recent years and is growing; This shows that it is possible to bring in stocks and other securities.

Tokenized real-world assets market cap | Source: CoinGecko