Blockchain technology has the potential to completely eliminate fraud on trading platforms created by banks, according to a recent whitepaper.
The report - authored by FinTech Network in partnership with BNY Mellon and Rabobank - explores blockchain use cases for banks.
It suggests a trading platform launched using a blockchain protocol would remove the threat or the risk of fraud.
Chris Mager of BNY Mellon Treasury Services stated “one of the main challenges facing the banking industry today is the growth of fraud and cyber-attacks.”
In recent years, regulators and authorities worldwide have issued billions of dollars’ worth of fines for banks and individuals committing fraud on trading platforms.
Earlier this month, Citi was fined $25 million by the US Commodity Futures Trading Commission (CFTC) for spoofing US treasury futures markets.
Spoofing is a type of fraud which involves a trader bidding or offering with the intent of cancelling before the trade is executed.
The whitepaper explained: “The traceability and the permanent historic record that would exist on blockchain backing up every asset or item of value that was traded would provide assurance and authenticity all the way through the supply chain.”
It added blockchain gives the benefit of distributed and verifiable trust that was not present before.