Several financial market firms including T. Rowe Price Associates, WisdomTree, Wellington Management, and Cumberland have joined the Spruce subnet on the Avalanche blockchain ecosystem to test blockchain-based foreign exchange (forex) and interest-rate swaps. The Spruce subnet, which is part of Avalanche’s Evergreen Subnet ecosystem, will initially use “valueless tokens” to conduct forex transactions without risking capital. Successful tests on Spruce will allow institutions to explore further blockchain settlement options, such as tokenized equity and credit issuance, trading, and fund management.
Spruce offers compliance features to ensure institutions comply with regulations, and firms must pass KYC verifications before receiving non-transferable tokens. WisdomTree’s head of digital assets, Will Peck, sees Spruce as a crucial step in improving traditional financial transactions’ efficiency. The subnet protocol was launched on April 6, and two subnets have been created, including Spruce and Intain, which focuses on structured finance. A joint study by Uniswap and Circle indicated that forex costs could be reduced by up to 80% by putting transactions on a blockchain network.
