T. Rowe Price Associates joins several prominent Wall Street firms to explore the potential of the Avalanche blockchain to revolutionize financial trade execution and settlement using a new application called Spruce.
T. Rowe Price Associates is joining forces with several Wall Street firms to explore the potential of the Avalanche blockchain to make financial transactions more efficient.
Along with Cumberland, WisdomTree Inc. and Wellington Management Group LLC, the firm will begin trials using a new application called Spruce in financial trade execution and settlement. The development follows similar efforts by KKR & Co. Inc., Apollo Global Management Inc. and JPMorgan Chase & Co. to adopt blockchain technology.
Blue Macellari, head of digital asset strategy at T. Rowe Price, sees this as an opportunity to study the technology in a low-risk environment without jeopardizing capital. Macellari acknowledged that there are barriers to institutional participation in the existing decentralized finance (DeFi) space, such as regulatory compliance.
The partnering firms intend to examine Spruce’s valueless token system in the context of foreign exchange and interest rate swaps. This could lead to cost savings and reduced risks associated with DeFi.
A previous report from Uniswap Labs and USD Coin stablecoin issuer Circle suggests that migrating the $7.2 trillion global money market to blockchain could reduce global remittance costs by 80% and eliminate settlement risks.
John Wu, president of Ava Labs, the lead developer behind Avalanche, said the valueless tokens allow parties to understand the regulatory and financial requirements for transacting on a blockchain. The testnet version of Spruce is designed to allow regulated buy-side and sell-side institutions to experiment with on-chain finance.
According to the press release, during the testnet phase, digital wallets of participating financial institutions will receive non-transferable tokens as proof of completion of verification processes such as Know Your Customer (KYC).
Spruce is the latest move by Ava Labs to provide custom blockchain network tools for institutions. It is part of Avalanche’s Evergreen subnet, a smaller version of the main Avalanche blockchain.
The main goal of the Evergreen Network is to address the challenges that institutions face in adopting blockchain technology, especially in the DeFi space. By providing a safe experimental environment, Spruce aims to pave the way for more institutional participation in the blockchain and DeFi space.