A judge for the Delaware Chancery Court has advocated for blockchain-based proxy voting as a means to put more power in the hands of shareholders.
Chancery Court Vice Chancellor J. Travis Laster spoke late last month during a meeting of the Council of Institutional Investors, a nonprofit organization dedicated to institutional investment issues. In his speech, Laster took aim at the business ecosystem for proxy voting – services that enable shareholders to cast votes on corporate decisions – arguing that “the current system works poorly and harms stockholders”.
He argued that issues with the way proxy voting happens today are largely driven by the services offering them, going on to advocate that new technologies like blockchain could provide much-needed solutions.
Laster told attendees:
“[Proxy services] are making healthy profits in a non-competitive market. They might play around the edges, but real change will have to come from the outside. The good news is that you have a plunger that you can use to clean up the plumbing. That plunger is distributed ledger technologies, the technology that drives bitcoin.”
Laster’s remarks didn’t come out of nowhere. Earlier this year, Delaware’s government launched an initiative to use the technology as a means to streamline the business registration process in the state. The state government is working with New York-based startup Symbiont on the project.
Using the technology to facilitate elections is a concept that has been around for some time. Today, software updates are used as a means to signal development preferences for projects like bitcoin and ethereum, and bitcoin’s proof-of-work system was described by creator Satoshi Nakamoto as a kind of “vote” in the original bitcoin white paper.
More recently, private services and local governments worldwide have begun testing the waters of this use case. Even Broadridge – a firm that drew Laster’s ire during his remarks – has been investing millions in developing blockchain-based voting mechanisms.
In his speech, Laster went on to cite complexity in how voting systems have been constructed as a primary driver for errors, arguing that the use of blockchain could deliver greater transparency and efficiency to an otherwise opaque process. He also called for the speedy adoption of the technology in order to begin addressing some of the concerns he aired.
“Someone is going to do this,” he said. “If a judge can see it, the opportunity is pretty obvious.”
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