Blame game rages over ASX’s failed CHESS system blockchain upgrade

Digital Asset blames the ASX for not providing it with crucial information while the ASX says these claims are misleading.

Digital Asset — the New York firm responsible for Australian Securities Exchange’s now-abandoned blockchain-based clearing system — has blamed the securities exchange for dropping its blockchain plans.

Meanwhile, representatives of the ASX have clapped back in statements to Cointelegraph, calling the claims misleading.

For the last seven years, the ASX was poised to be the world’s first securities exchange to adopt blockchain technology, which would be in partnership with the New York-based firm. However, in a u-turn, ASX announced on May 17 that it would be abandoning the upgrade and likely look at more conventional tech.

According to a recent report from The Australian, Eric Saraniecki, the co-founder of Digital Asset told the attendees of a June 8 parliamentary joint committee on corporations and finance that there were two main reasons why the blockchain upgrade resulted in failure.

First, Saraniecki alleged that ASX was unwilling to hand over important test data that would’ve allowed Digital Asset to better test the functionality of the new system.

“It impacted our ability to design something that would meet their full requirements.”

He said he was unsure why the ASX was so reluctant to hand over this key data, but it ultimately caused Digital Asset to have to make “assumptions in a vacuum.”

Second, Saraniecki said that despite the ASX talking publicly about a “big bang” method of replacing its nearly 30-year-old CHESS platform, it was simultaneously telling Digital Asset to preserve antiquated elements of the old system. This reportedly led to further discord between the two companies and the eventual failure of the upgrade’s implementation.

Concerns were not properly raised, defends ASX

However, in comments shared with Cointelegraph, ASX’s Non-Executive Director David Curran said the issue was a lack of communication from Digital Asset regarding their concerns.

Curran said had made it clear to “senior members of Digital Asset” and others that if there were concerns about the project, there were ways that they should have been raised and resolved.

“I did make it very clear to Digital Asset…I had little patience for software and hardware vendors, who said they weren't happy about doing something but did it anyway, because the client told them to.”

“If they genuinely believed it was wrong, they had mechanisms to stop that and actually to raise [those concerns]. In those conversations I agreed that had not been done,” Curran added.

Curran clarified that he couldn’t speak “too much” to the specifics of this matter due to the nature of the ongoing review.

The ASX’s Managing Director and CEO Helen Lofthouse said that it wasn’t so much the “flexible requirements” causing challenges in the project, it was the pre-existing requirements of the system itself and the way that related to how settlements work in Australia.

Lofthouse explained that the Nov. 17, 2022 decision to announce a pause on the upgrade arose from the conclusion that the original solution design “was not going to be able to do what we needed it to do, which was both meet the current market requirements and give the flexibility.“

While it has been widely-reported that the ASX had taken blockchain tech off the table completely, ASX CIO Tim Whiteley told Australian tech publication ITNews that “no firm decision” had been made.

“We remain on track to announce a solution design in the last quarter of this calendar year and we continue to explore all options for the solution design,” added Whiteley.

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31% of young Aussies hold crypto despite being ‘risk averse’ — ASX survey

ASX

While young Australians are more interested in crypto, it’s the 25- to 49-year-olds who own the most.

Despite seeing themselves as more “risk averse” than their older counterparts, nearly a third of all young Australian investors hold or have traded cryptocurrencies over the last year, a new study has found.

In an Australian investor study from the Australian Securities Exchange (ASX), 46% of “next generation investors” — the report’s terminology for investors aged 18 to 24 — described themselves as preferring “stable returns” — yet 31% of them invested substantially in crypto.

*Attitude towards investment risk by age group. Source: ASX*

“The apparent financial conservatism of younger investors is at odds with their level of investment in cryptocurrency,” the report wrote.

Researchers said the reason that younger people invested in crypto boiled down to a desire to do things differently from their parents combined with the observation that “many of the 1.2 million new investors who've taken up investing since 2020 are tech-savvy and connected to social media.”

According to ASX’s study, which was undertaken by financial research firm Investment Trends, the median holding of cryptocurrency for “next generation” investors stands at $2,700, representing a 6% weight in their total portfolio, double that of the 3% crypto allocation for all other investor age groups.

However, while young investors owned the most crypto relative to their portfolios, it was the “wealth accumulators” — investors aged 25 to 49 — who owned the most cryptocurrency overall, accounting for 69% of the total investment in digital assets. Investors aged 50+ accounted for just 19% of overall crypto ownership.

*Overall crypto investment snapshot for Australian investors. Source: ASX*

This report marked the first time that cryptocurrency had been included as an asset class in the ASX’s Australian Investor Study. As such, the report approached the subject with a degree of caution, saying it’s still up for debate whether cryptocurrencies can become “fully accepted in mainstream investing.”

Still, the study admitted that despite its volatility, cryptocurrency remains a popular choice among investors, revealing that 29% of all “intending investors” — people who don’t currently invest in any capacity — are considering some type of crypto investment within the next 12 months.

Notably, centralized crypto exchanges were singled out as a potential “handbrake” for the growth of crypto investment in the future.

The United States Securities and Exchange Commission’s recent spate of legal action against exchange giants Coinbase and Binance in the United States stands as a clear example of challenges facing centralized exchanges.

Australia's crypto exchanges have also faced challenges in recent months. In May, Binance Australia announced it is suspending all Australian dollar-denominated services in June after its local payments provider was ordered to halt support for the exchange. On the same day, Australia’s second-largest bank, Westpac, banned customers from transacting with the exchange.

The following month, Commonwealth Bank — Australia's largest bank — said it may decline certain payments to crypto exchanges, citing a "high risk" of scams.

The biggest bank in Australia, @CommBank has just taken a giant step backward. They are blocking crypto transactions "for our safety". pic.twitter.com/4tsddbNPg8
— Charles Edwards (@caprioleio) June 15, 2023

The research for the ASX’s report was conducted in November 2022, with its findings based on an in-depth online survey of 5,519 Australian adults.

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