With Vulcan Project, PwC Wants Banks to Rethink Bitcoin

Digital currencies may have launched the blockchain conversation, but it's no secret that they've taken a backseat amid rising interest in distributed ledgers.

Now, with the help of 'Big Four' audit firm PwC's Australia division, a trio of startups are making a play aimed squarely at altering this narrative by convincing financial institutions that bitcoin (and the open network of digital currencies that has sprung up around it) could help them launch new services and better serve existing customers.

Called Vulcan Digital Asset Services, the platform (a joint effort by Bloq, Libra, Netki and PwC), aims to enable the professional services firm's clients to launch digital assets that would be interoperable with and trade alongside bitcoin and its many alternatives.

In interview, Vulcan lead and PwC Australia blockchain leader Robert Allen explained that the initiative grew out of a bid to make bitcoin more accessible to large institutions.

Allen told CoinDesk:

"Where we started was with digital currency, 'How do we make bitcoin relevant to banks?' It soon became apparent that using identity, using methods to apply compliance and regulatory reporting to cryptocurrencies like bitcoin actually had a wide application."

Allen explained that a retailer could use Vulcan to issue its own rewards points that could be traded for bitcoin or other digital assets.

PwC's platform would then take care of providing the supporting blockchain infrastructure, enabling clients to create wallets, process payments and, maybe soon, launch merchant services.

In this light, Allen framed PwC's effort as one that would allow clients to meet compliance needs while still leveraging the open-source blockchain ecosystem, but in a way where the digital currency network would only be run by authorized participants.

Libra's Jeremy Drane, a former FinTech lead at PwC, called Vulcan a "huge" step in uniting the now divided blockchain and digital currency ecosystems.

"This stack eliminates the argument that banks cannot allow consumers to buy, sell and use bitcoin, and other types of cryptocurrencies due to technical limitations and the implications on related regulatory schemes," he told CoinDesk.

Though driven by PwC Australia, Allen said that Vulcan is rather a product of feedback from the firm's entire "global network", and that it could one day launch as a subscription service.

Decoding Vulcan

So, what is a digital asset service under the hood?

As explained by Bloq co-founder Matt Roszak, the new offering isn't all that dissimilar from offerings by so-called "blockchain startups", in that users could create a new blockchain and then link it to another public blockchain (like bitcoin).

But Roszak contends Vulcan is best considered as an "enablement platform" that would provide businesses with a "plug and play" way to launch digital currencies (rather than their own standalone blockchains). This goal is perhaps not a surprise as Vulcan was built by Bloq, a startup that seeks to help enterprises feel more confident in using the bitcoin blockchain.

For the effort, Allen said that Bloq had created the tools for its clients to launch a "multi-asset blockchain" that would enable users to issue digital assets. On top, would be identity and compliance services provided by Netki and Libra.

Roszak said Vulcan is already in talks with one central bank to use the service and that a key advantage to the platform is that it would include many of the features needed for a US dollar coin or a UK pound coin out of the gate.

Long term, Allen foresees Vulcan potentially even offering wallet services to users who would hold "multiple types of fiat and cryptocurrency."

"We don't see this as being counter to the principle of cryptocurrency, but taking it to a wider customer base. We have the ability within professional services to educate the regulators, the corporates and the wider population on the benefits of digital currencies," he added.

Understanding resistance

According to Allen, the launch represents the culmination of more than two years of work in the space for PwC and his division.

But while the result may be unconventional by today's industry standards, Allen said that he believes PwC has removed real hurdles by bundling its services creatively and leveraging its existing brand recognition.

For example, Allen said PwC has already made inroads in Australia, where he asserted that his firm has had a positive dialogue with regulators, one that has successfully assuaged concerns regarding consumer protection and compliance.

Yet, Allen reported that the learning curve remains steep, and that more progress needs to be made before the service (or those like it) will be widely adopted.

"There's a lot of education and some of the clients are resistant for obvious reasons, and those have affected the uptake and adoption and digital currencies in the wider sense," Allen continued. "We use our relationships with those clients to try to understand where the resistance is, and overcome it with what we have, the facts."

In his remarks, Allen offered praise for bitcoin, arguing that it has shown that digital currencies can offer "huge utility" as well as a working model for enterprises to follow in launching similar networks.

"In terms of a digital currency, bitcoin's pretty much the only game in town," Allen said.

Path ahead

But while a development that could open more enterprise institutions to public blockchain, the initiative is just entering its first stages.

Allen indicated that the platform is currently operational as a proof-of-concept, and that it will be unveiled at the Singapore FinTech Festival this week.

"We're using the event as the launchpad to come out of stealth and tell the world what we're doing," Allen said.

Allen expects that the announcement will help drive interest and bring more firms to the platform, with a potential for more announcements later next year as various projects mature.

He concluded:

"We have a strong pipeline of organizations that see the merit of what we're doing and we expect to go into PoC very soon."

Images via PwC