T. Rowe Price Associates, together with several prominent Wall Street companies, is set 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 companies to explore the Avalanche blockchain’s potential in enhancing the efficiency of financial transactions.
Alongside Cumberland, WisdomTree Inc., and Wellington Management Group LLC, the firm will commence trials in financial trade execution and settlement using a new application known as Spruce. This development follows similar efforts by KKR & Co. Inc., Apollo Global Management Inc., and JPMorgan Chase & Co. in embracing blockchain technology.
Blue Macellari, the Head of Digital Assets Strategy at T. Rowe Price, sees this as an opportunity to investigate the technology in a low-risk environment without jeopardizing capital. Macellari acknowledged that there are barriers to institutional involvement in the existing decentralized finance (DeFi) landscape, such as compliance.
The collaborating companies intend to examine Spruce’s valueless token system in the context of foreign exchange and interest rate swaps. This could potentially result in cost savings and risk reduction associated with DeFi.
A prior report by Uniswap Labs and Circle, the issuer of USD Coin stablecoin, suggested that migrating the $7.2 trillion global currency market to the blockchain could decrease global remittance costs by 80% and eliminate settlement risks.
According to John Wu, President of Ava Labs, the main developer behind Avalanche, the valueless tokens enable all parties to understand the regulatory and financial requirements for conducting transactions on the blockchain. Spruce’s testnet version is designed to allow regulated buy- and sell-side institutions to experiment with on-chain finance.
In the testnet phase, digital wallets of participating financial institutions will receive non-transferable tokens as proof of completing verification processes like know your customer (KYC), as per the press release.
Spruce is the most recent initiative by Ava Labs to offer custom-built blockchain network tools to institutions. This is part of Avalanche’s Evergreen subnet, a smaller version of the main Avalanche blockchain.
The primary goal of the Evergreen network is to address challenges that institutions face when adopting blockchain technology, especially in the DeFi sector. By providing a secure environment for experimentation, Spruce aims to pave the way for greater institutional involvement in the blockchain and DeFi space.