Greg Medcraft, chairman of Australian Securities and Investments Commission (ASIC) said that global regulators are attuned to blockchain risks. He also stated that blockchains must be able to operate with each other and the financial services companies that use them, will have to stand behind the technology in case it fails.

Talking to the Australian Financial Review, he commented on the principles guiding global regulators' assessment of emerging blockchain technology. He also suggested that regulated financial institutions seeking to use 'smart contracts' on blockchains may have to integrate 'kill switches' in the programs to stop computers automatically executing in times of stress.

"Somebody will need to stand behind and guarantee performance for the market. Someone is going to have to guarantee that the thing work," he said.

Blockchains in the financial services industry would need to be 'permissioned' networks, said Medcraft. This means that access is restricted to known parties, in contrast with the open and public blockchain. He said that global regulators had identified three key risks from the technology:

• fragmentation
   
• excessive complexity
   
• cyber-security

Several leading financial institutions have joined forces with various blockchain developers such as R3 CEV, Ripple, Digital Asset Holdings, IBM's Hyperledger and others to unlock the potential of the technology.

"Interoperability is going to be very important in this," Medcraft said from ASIC's Sydney headquarters. "You want to be able to use different suppliers: as long as they can talk to one another, that works. Fragmentation is one of our big concerns. But if you put your customers first, interoperability makes a hell of a lot of sense."

Medcraft also revealed that global regulators want to ensure that investors and markets fully understand the risks that blockchain pose including bugs and errors.

Medcraft just relinquished the chair of the International Organisation of Securities Commissions (IOSCO). He finished his term as IOSCO chair in May after a three-year term in which he drove the global regulatory community's engagement with blockchain.