Investment research firm Citizens JMP Securities claimed in a report this week that the adoption of blockchain can eliminate 'friction costs' in the processes of payment, settlement, and ownership verification, accelerating global economic growth. However, the report did not provide quantitative projections for the impact on GDP.
The analyst team led by financial technology research director Devin Ryan explained that 24-hour trading and almost instantaneous settlement can reduce counterparty risk in assets tied up as collateral and throughout the financial system, thereby increasing capital turnover.
The company cited the announcement of the New York Stock Exchange's blockchain-based tokenized securities platform as evidence that traditional infrastructure operators are integrating this technology into their core systems.
Claims of economic impact
The analysis by Citizens JMP suggests that blockchain infrastructure could support economic expansion through a system better suited for faster capital recycling, an expanded investable asset class, and 'an increasingly digitized and AI-driven world.'
However, this research did not present a peer-reviewed methodology demonstrating the impact of blockchain adoption on GDP, specific GDP multipliers, or the timeline for measurable economic effects to appear.
The report emphasizes that institutional investors are transitioning from the pilot program phase to actual commercialization, noting that the NYSE platform plans to support 24/7 trading of tokenized stocks and ETFs with immediate settlement.
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NYSE platform context
The new venue awaiting SEC approval on the NYSE exchange is expected to combine the exchange's Pillar matching engine with blockchain clearing infrastructure that supports stablecoin funding and multi-chain custody options.
According to parent company Intercontinental Exchange (ICE), tokenized stocks maintain interchangeability with securities issued in the traditional manner, ensuring the same dividends and voting rights.
ICE has not provided a schedule for regulatory approval or a launch date for this platform, as it requires changes to clearinghouse regulations and approval processes that enable institutional investors to hold blockchain-based assets.
Verification gap
The argument by Citizens JMP that 'faster settlement reduces friction tax' lacks a concrete cost-benefit analysis comparing the costs of blockchain implementation with the existing T+1 settlement infrastructure.
The company's claims regarding capital turnover rates are predicated on the assumption that the regulatory framework allows for tokenized securities, that the custody structure meets institutional compliance requirements, and that the tax reporting system can handle real-time settlement. However, these conditions have yet to be established.
Traditional financial infrastructure faces significant transition barriers, including the regulatory capital treatment of on-chain assets, stablecoin requirements for securities settlement, and interoperability between blockchain networks and existing settlement systems.
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