The US Depository Trust and Clearing Corporation is floating the idea of forming an industry consortium to develop a coordinated strategy for addressing security risks in the implementation of distributed ledger technology in financial services.
The US depository, has published a white paper, 'Security of DLT Networks', that recommends establishing a comprehensive framework to review existing security guidelines, gaps in the approach to DLT security, and the need for increased standards.
Such a Framework, possibly spearheaded by an industry consortium, would lay down guidelines for individual firms, address critical aspects of the DLT key management lifecycle and the use of cryptographic hash functions, and ways to bridge the security gap between DLT and traditional IT environments.
“With adoption of DLT across the financial services ecosystem likely to continue to increase in the coming years, we need to be certain that all DLT-related security risks are identified and addressed to maintain the safety and stability of the markets,” says Stephen Scharf, chief security officer at DTCC. “DLT offers great potential, but as with any new technology, it also comes with certain risks. Traditional security measures may not be adequate, so it is critically important that this topic is top of mind for any DLT implementation.”
He says the firm intends to leverage its role as a key market infrastructure to begin the conversation across the industry.
“As is common in IT security communities, frameworks must be widely available, generally agreed upon, and commonly adopted," he adds. "As best practices mature, they can be adopted into a formal framework and used for financial industry participants and regulators alike."
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