Clearinghouse vs. blockchain?

Please help me to
understand this. There will a centralized clearing house with medici?
If so why? What are the legal issues that lead to such a
decision/requirement? What role does the blockchain then fullfill?

...I was of the impression that the blockchain would replace the clearinghouse. Anything wrong with that impression? 

This probably has to do with how Medici/Counterparty will interface with the existing clearinghouse infrastructure. The Blockchain can still record asset ownership and transfer of ownership transparently. This data would probably have to be relayed periodically through the clearinghouses too.

The long term goal is probably exactly that - some of Counterparty’s functionality will replace the clearinghouses. But until then it needs to prove itself and work with them.