Noelle Acheson is a 10-year veteran of company analysis, corporate finance and fund management, and a member of CoinDesk's product team.

The following article originally appeared in CoinDesk Weekly, a custom newsletter delivered every Sunday to our subscribers.

While high-profile consortiums such as Hyperledger and R3 are bulldozing along to big fanfare, a relatively small effort is quietly working on a project whose repercussions could soon be felt around the world.

Last year, a group of 10 asset managers and fund service providers based in Luxembourg created Fundchain, a sector consortium aimed at exploring the potential impact of blockchain technology on the fund management industry.

Although launched with little noise, its potential is huge.

Luxembourg currently has the second largest investment fund sector in the world behind the US, and a 65% market share in cross-border fund distribution.

What's more, asset management is set to reap the benefits of certain economic trends (a growing middle class in emerging markets needing outlets for their savings) and demographic shifts (an ageing population leading to growth in pension funds).

Amidst this backdrop, an upcoming piece of legislation is set to buffet the industry with a sweeping change that will produce upheaval and possibly contraction.

I'm talking about Mifid II. It's hard to overstate the impact these regulations will have on asset management.

Due to come into force in January 2018, Mifid II aims to increase transparency, enhancing investor protection and removing shady practices in pricing and allocation. Fund managers will be required to pay separately for research, financial advisers will no longer earn a commission and reporting requirements will multiply.

And that's just scratching the surface.

An independent report estimates the cost of complying with Mifid II to be more than £2.5bn. This is likely to bring about a sector shift, with many smaller firms not being able to bear the cost, and larger enterprises offsetting the increase elsewhere.

Even more worrying, a recent survey showed that most sector participants are not prepared for the changes.

Although it will only affect funds domiciled in Europe (for now), the repercussions will be felt around the world.

Luxembourg is the seventh largest foreign holder of US treasury securities, and over 20% of funds listed in the country are promoted by US companies. Further, the duchy is the largest European domicile for Islamic funds and the continent's top renminbi (yuan) center.

So, here we have a highly regulated sector that has to overhaul a manually-intensive, inefficient and sometimes opaque system of managing documents, reporting information and transferring value.

At the same time, there is an urgent need to reduce operating costs across the board, to offset the loss of revenue and increased compliance expenses.

The ideal solution? A sector-wide system that can leverage transparency, reliability and connectivity. Plus, a way to share pricing and identity data without the risk of interference or centralized control.

This is where what Fundchain is doing gets interesting.

In December of last year, the consortium unveiled a proof-of-concept for a distributed ledger platform designed to smooth the operations of transfer agents, who act as intermediaries between investors and distributors on the one hand, and the fund managers and service providers on the other.

This week, the consortium revealed in an interview with CoinDesk that it is working on four other blockchain use cases, and aims to bring one of them to production by early next year.

While the full-scale substitution of current systems by a relatively new technology is unrealistic (and unwise, given the systemic importance of the transactions and the integrity), the need for an efficient and future-proof solution is obvious.

It’s not just about complying with new rules. It's about surviving.

Asset management accounts for over 50% of Luxembourg’s economy. Should the sector crack, so would the region, and the repercussions would be felt around the globe.

On the other hand, if Luxembourg’s fund managers, service providers and regulators manage to adapt and implement a new type of interaction, the sector could be poised to harness the financial trends that point to an even greater role for wealth management in the world economy.

All this from a tiny country that is home to a small, modest consortium doing something potentially very big.

Gong image via Shutterstock