So far, Morningstar has been working on two major blockchain-based efforts in the debt securities industry. One of them intends to put Morningstar’s system for rating bonds directly on the Ethereum blockchain via a technology called an oracle, the report notes.
Oracles move data onto a blockchain in a way that ensures the data is not manipulated and therefore makes it eligible to be used in a smart contract.
The second project involves making quantitative rating models for debt securities available on a blockchain. Credit agencies use said models to determine the creditworthiness of different types of debt securities.
According to Brawer, the smart oracles project could be ready as soon as the end of 2019, but the blockchain modeling project might not be ready for launch until the end of 2020.
The potential partners for Morningstar’s product reportedly include blockchain-focused startup Figure, Coinbase-backed alternative investment provider Cadence and decentralized finance platform Polymath.
Meanwhile, it is still unclear whether Morningstar’s blockchain methodology needs to be approved by the United States Securities and Exchange Commission (SEC), the report notes. Brawer said that there is a very elaborate and intricate governance process which is all based on the Dodd-Frank law and SEC regulations.
In July, blockchain-based alternative investment provider Cadence launched an investment platform for debt.
