S&P: Blockchain Could Change Ratings for Banks

Standard & Poor's (S&P) may consider changing the ratings of major financial institutions if the use of blockchain technology becomes widespread and starts to impact current business models, according to a CNBC article.

The rating agency believes that a rising investment in blockchain technology suggests that a "transformation" of the financial industry could be underway.

In a recent report, S&P stated, “While blockchain technology will likely be used for niche applications, market-wide adoption is a long way off, since it will require consensus among market participants and, in some cases, regulatory approval…As a result, we do not see blockchain as a rating driver in the near term or even perhaps in the long term. But we consider that, depending on the technology's eventual application and whether it takes hold in the financial industry, it could have a substantial impact on institutions' business models."

S&P said that blockchain technology could give firms a competitive advantage or even begin to "diminish the relevance" of certain business models. In this case, S&P said it could "consider rating changes if its widespread implementation occurs faster than we currently expect, resulting in an extensive impact on financial institutions' operating models".

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