Morgan Stanley says that banks should take a pragmatic approach to making Blockchain a reality and cannot see regulators allowing an ‘unpermissioned’ distributed ledger on the Bitcoin/Blockchain model.

Speaking recently to members of The Bitcoin and Blockchain Leadership Forum, Morgan Stanley’s research analyst, Fiona Simpson argued that the best use cases for Blockchain are based on reducing inefficiencies in capital markets infrastructure.

Suggesting there is possibly ‘too much optimism’ about Blockchain she highlighted a number of roadblocks that stood in the way of blockchains becoming a reality in banking. These include: the question of who funds the overhaul of old systems; evolving to the right standards; governance and regulatory issues; legal risks and security risks and simplicity and interoperability.

While there is clearly a role for VC sponsored start ups, Morgan Stanley believes that industry supported consortia – like R3- have the edge. Simpson rejected suggestions from members that consortia could lack a network effect and would not be as open to innovation due to their closed nature.

In its research, Morgan Stanley predicts the full impact of Blockchain technologies will not be felt in 2017/18. However the global insight team has singled out post trade settlement for a variety of asset classes at the top of the best potential use cases for Blockchain.