May 30, 2024 12:25
Three well-known financial market infrastructures (FMIs) DTCC,Clearstream, and Euroclear along with Boston Consulting Group (BCG), haverevealed a blueprint aimed at establishing an industry-wide digital assetecosystem to foster the acceptance of tokenized assets.
Projected to reach a $16 trillion business opportunity by2030, the tokenization of global illiquid assets has garnered significantattention. However, institutional adoption has faced challenges due tofragmented innovation and small-scale initiatives lacking broader ecosystemdevelopment.
Framework for Digital Asset Adoption
The jointly released paper, titled "Building theDigital Asset Ecosystem," endeavours to redirect industry focus byoutlining six principles intended to facilitate successful adoption oftokenization and digital asset securities, excluding cryptocurrencies.
These principles encompass legal certainty, regulatorycompliance, resilience and security, safeguarding customer assets, connectivityand interoperability, and operational scalability.
While many firms recognize that blockchainholds enormous promise to deliver cost savings, capital efficiencies andreduced risk, the industry needs to pivot and demonstrate tangible results andvalue generation, said Nadine Chakar, Managing Director, Global Head of DTCCDigital Assets.
Collaborative Standards and Risk Mitigation
The aim of these principles is to provide a roadmap for theindustry to collaborate and establish comprehensive standards for the digitalasset marketplace. Alongside these principles, the paper also introduces arange of risk management controls to aid firms in mitigating potential risksassociated with digital assets, such as asset mismanagement and governance ofsmart contracts.
New technologies bear immense potential tobring financial markets to the next level of efficiency, speed and safety,said Jens Hachmeister, Managing Director, Head of Issuer Services & NewDigital Markets at Clearstream.
BCG conducted an analysis as part of this initiative, whichinvolved reviewing approximately 100 regulations and whitepapers across variousjurisdictions, as well as conducting over 20 interviews with key marketparticipants and technology vendors.
Philippe Laurensy, Managing Director and Head of Product,Strategy & Innovation, Euroclear, commented: Our objective is to create innovativesolutions that will address the evolving needs of our customers and driveindustry advancements which includes clients having the flexibility to createspace on their balance sheets through tokenisation, therefore leading to newbusiness opportunities.
This article was written by Tareq Sikder at www.financemagnates.com.
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