Digital Asset and ASX Exchange Blame Each Other for Abandoned Blockchain Project

Digital Asset, the New York-based firm responsible for developing the blockchain-based clearing system for the Australian Securities Exchange (ASX), has pointed fingers at the securities exchange, blaming it for abandoning their joint blockchain plans. However, ASX representatives have countered these claims, dismissing them as misleading. The ASX had initially aimed to become the world’s first securities exchange to adopt blockchain technology in collaboration with Digital Asset. However, the ASX recently made a U-turn, announcing the abandonment of the upgrade and a potential shift towards more conventional technology.

Reasons for Failure:

During a parliamentary joint committee meeting on corporations and finance, Digital Asset co-founder Eric Saraniecki attributed the failure of the blockchain upgrade to two main reasons. Firstly, Saraniecki alleged that ASX was unwilling to provide essential test data, hindering Digital Asset’s ability to design a system that fully met ASX’s requirements. Secondly, despite ASX publicly discussing a “big bang” approach to replacing its outdated CHESS platform, it reportedly insisted on preserving elements of the old system, causing further discord and ultimately leading to the project’s failure.

ASX’s Response:

ASX’s Non-Executive Director, David Curran, countered Digital Asset’s claims, stating that the issue stemmed from a lack of communication regarding their concerns on the part of Digital Asset. Curran highlighted that there were established mechanisms for raising and resolving concerns, and he had little patience for vendors who proceeded despite expressing unhappiness. ASX’s Managing Director and CEO, Helen Lofthouse, emphasized that the challenges arose not from flexible requirements but from the pre-existing system’s constraints and its relation to settlement processes in Australia. The decision to pause the upgrade was made based on the realization that the original solution design would not meet market requirements or provide the necessary flexibility.

Current Status and Future Plans:

While it has been widely reported that ASX completely removed blockchain technology from consideration, ASX CIO Tim Whiteley clarified that no firm decision had been made. Whiteley stated that a solution design would be announced later this year, and ASX continues to explore all options for the project.

The abandoned blockchain project between Digital Asset and ASX has resulted in a blame game between the two parties. Digital Asset alleges that ASX’s unwillingness to share crucial test data and conflicting requirements contributed to the project’s failure. However, ASX asserts that the lack of communication from Digital Asset regarding their concerns played a significant role. Despite the setback, ASX remains committed to finding a suitable solution and is set to announce a revised design in the coming months. The outcome of this ongoing review will determine the future direction of blockchain adoption by the Australian Securities Exchange.