Banks are exploring using blockchain to increase the efficiency of trading syndicated loans. The hope is to increase the liquidity and transparency of the secondary market for loans. The risk is that their efforts will be so successful that the loans may lose their historical exemption from the registration and anti-fraud provisions of the Securities Act and Securities Exchange Act.
“Could Blockchain Push Syndicated Loans over the Regulatory Edge?” is a cross post from the firm’s Asset Management ADVocate blog. The post explores steps that might be taken in designing a blockchain system that might prevent syndicated loans from being characterized as “securities” under federal laws.