According to a recent report issued by the financial and investor services company Moody, it is expected that blockchain technology will become standardized across the globe by the year 2021. The current lack of any standards, at least formalized across international borders, is holding back the industry though, prompting a need for adopting a set of standards.
The report, published on September 5, explained that there will likely be standards governing the industry within the next couple of years. This, the report concluded, will be a positive for “future securitizations using the technology.”
In the report, Frank Cerveny, Vice-President and senior research analyst at Moody’s, explained that “Standardisation of blockchain technology would make its benefits more accessible for securitizations. Standardization would improve interoperability across systems and market participants, but also reduce counterparty concentration, operational and legal/regulatory risks for transactions that use blockchain technology.”
This announcement, according to the board, pointed out that this new initiative will to try to standardize the blockchain industry in response to a call by the International Organization for Standardization. Researchers pointed out that the lack of any standardization is limiting the overall operational efficiency that should be attained through using this technology. It pointed out that only minuscule gains are being achieved because of the lack of standards.
However, this may not be as easy as one would suspect. It starts with the fact that there is not even a standardized language that is used to describe many of the terms related to blockchain technology. In fact, regulators still struggle with many of the terms, so it will become necessary to create a standard of common terminology so that regulators will have a common frame of reference when discussing legal and technical terms related to blockchains.
Currently, the International Organization for Standardization Technical Committee 307, ISO/TC307, is working on creating a uniform set of standards related to this terminology. This will also include standards related to security risks, legally binding smart contracts, ontology, and taxonomy.