Three well-known financial market infrastructures (FMIs) – DTCC, Clearstream and Euroclear – together with the Boston Consulting Group (BCG), have unveiled a blueprint aimed at building an industry-wide digital asset ecosystem to drive the adoption of tokenized assets.
The tokenization of global illiquid assets is expected to create a $16 trillion business opportunity by 2030 and has received a lot of attention. However, institutional adoption has faced challenges due to fragmented innovation and small-scale initiatives that lack broader ecosystem development.
The jointly released article, titled ‘Building the Digital Asset Ecosystem’, seeks to shift the industry’s focus by outlining six principles intended to facilitate the successful adoption of tokenization and digital asset securities, excluding cryptocurrencies.
These principles include legal certainty, regulatory compliance, resilience and security, protecting customer assets, connectivity and interoperability, and operational scalability.
“While many companies recognize that blockchain holds tremendous promise to deliver cost savings, capital efficiency and reduced risk, the industry needs to pivot and demonstrate tangible results and value creation,” said Nadine Chakar, Managing Director, Global Head of DTCC Digital Assets.
Collaboration standards and risk mitigation
The purpose of these principles is to provide the industry with a roadmap to collaborate and establish comprehensive standards for the digital asset market. In addition to these principles, the article also introduces a set of risk management controls to help companies mitigate potential risks associated with digital assets, such as asset mismanagement and smart contract management.
“New technologies offer enormous potential to take the financial markets to new levels of efficiency, speed and security,” said Jens Hachmeister, Managing Director, Head of Issuer Services & New Digital Markets at Clearstream.
BCG conducted an analysis as part of this initiative, reviewing approximately 100 regulations and white papers across jurisdictions, as well as more than twenty interviews with key market participants and technology providers.
Philippe Laurensy, Managing Director and Head of Product, Strategy & Innovation, Euroclear, commented: “Our goal is to create innovative solutions that meet the changing needs of our customers and drive industry progress, including customers who have the flexibility to create space on their balance sheets through tokenization, leading to new business opportunities.”