JSE says digital trading platform will offer multiple servicesWednesday, June 30, 2021
Managing Director of the Jamaica Stock (JSE) Exchange Marlene Street-Forrest says the advent of the planned digital currency by the Bank of Jamaica makes the JSE even more bullish about its planned digital currency platform.
The JSE is looking towards year end to offer cryptocurrencies and other digital currencies as tradable assets to its customers, and has signed a memorandum of understanding with the start-up Blockstation for the creation of the new trading platform.
Benefits of the digital platform are expected to include lower transaction costs and greater ease of business when conducting international transactions.
Crypto-exchanges, such as that planned by the JSE, allow traders to swap currencies, for example, the United States dollar or euro for the digital currency, or digital currency for digital currency.
“I wish to emphasise that our platform, when approved to go live, is about digital assets, with one component being the trading of approved digital currency on the platform.
“The JSE Digital Asset Trading Platform (JDAP) will bring many efficiencies to the investment life cycle with the use of smart digital processes and blockchain technology.” Providing an example, she said, “The issuer can access the portal and start building the prospectus, engage with brokers as well as submit their prospectus to the JSE, all in a seamless electronic process.”
The JSE platform, which is currently undergoing regulatory review prior to approvals, will facilitate both blockchain and digital currencies, Street-Forrest said.
Blockchain powers the use of cryptocurrencies, such as bitcoin, ethereum, and EOS.
The Bank of Jamaica (BOJ) is working on its own offer of a digital currency as an alternative to cash later this year. The central bank digital currency (CBDC), as it is called, will launch in test mode later this year as an addition to banknotes and coins, and will be backed by the central bank as legal tender.
The currency will not be cryptocurrency, which is privately issued and not backed by a central authority. CBDC will be fully backed by the central bank, the sole issuer.
The BOJ chose a non-blockchain CBDC option so as to secure a product which can interface with the country's payment infrastructures. It is expected that the product will be easily distributed through financial intermediaries, facilitating easy loading on end-user mobile devices, cards, and facilitating robust risk management tools.
Street-Forrest sees no contradiction between the central bank's agenda and the widening use of blockchain.
“The central bank's plan to launch a digital currency shows that they understand the value of the underlying use of blockchain technology in advancing digital currency as a means of exchange and a store of value. There are several central banks across the world that are pursuing this means and it does not have a bearing on bitcoin as it is just one other digital currency,” she said.
The JSE head is, meanwhile, not flummoxed by the deep dive taken by cryptocurrencies on other trading platforms since the start of 2021. The crypto market is volatile compared to traditional stocks. Bitcoin, for example, rose from US$45,000 in March 2021 to a high of US$63,000 in mid-April — then plunged to US $35,000 in May before ticking up to $36,000 in June.
“In respect to assets or currencies, a rise or fall does not result in a discontinuation, it is simply expressed as the market's valuation of that currency.
“The JSE has never expressed the platform as the cryptocurrency trading platform but, rather, as a digital asset platform which includes the trading of digital currency. Naturally, we will go ahead when all approvals have been received,” Street Forrest said.
She noted that some Jamaicans are already purchasing digital currencies outside of a regulated environment and so are aware of its utility.
“JSE and Blockstation have been sensitising the public on blockchain, digital currencies and the digital asset platform,” she said
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