15/06/2020 by Future of Finance 1 Comment
SETTLEMENT AND CUSTODY OF DIGITAL ASSETS PART II
22nd September 2020 2.00-3.00 pm BST time
Incumbents in the securities services industry concluded last year that blockchain would not disrupt post-trade services after all. Yet the potential advantages of tokenising equity and debt securities, especially in terms of operational, intermediation and liquidity cost savings, remain compelling. And paths through the obstacles to progress are becoming clearer. Payment tokens and Stablecoins are filing the gaps at least until Central Bank Digital Currencies (CBDCs) finally solve the problem of on-chain (or on-network) settlement in multiple fiat currencies. Effective tools for safekeeping digital assets, and the orthodox financial assets that underpin some of them, are being designed. Work is under way to agree the technical standards that will allow tokenisation platforms and established trading platforms to inter-operate. Governments are gradually publishing rulings and even laws which offer issuers of digital tokens and their investors the regulatory certainty they need. This Future of Finance event picks up where the first left off and explores the current state of play in these four areas: settlement, safekeeping, standards and regulation.
The conventional view of the impact of blockchain technologies on the clearing and settlement of securities has shed the alarmist tone of 2016-2018. A string of blockchain proofs of concept and pilot tests that led nowhere – and delays and modifications to the one major industry project that did press ahead - have convinced industry insiders that their industry is safe from disruption. In their view, it is efficient enough already. Even where it is not, shifting off ageing but complicated technology platforms are too risky and expensive to undertake. Blockchain might be relevant in some limited areas (such as collateral management) or applicable to other asset classes (such as commodities and real estate) but, runs the argument, less ambitious technologies such as robotic process automation (RPA) and data-crunching artificial intelligence and machine learning (ML) tools have more to offer the industry. The lasting legacy of the era of blockchain hype might, however, be something different – namely digital or tokenised assets listed and exchanged on platforms where transactions settle instantly between counterparties rather than via multiple intermediaries and the assets are safekept in wallets secure from external threats of the kind that bedevilled the crypto-currency markets. The elements that will enable tokenised digital assets markets to take off – closed networks, scalable technologies, settlement finality, asset safety, regulatory certainty and the standards that drive inter-operability – are being put in place. If issuers can be convinced security tokens will lower their cost of capital, and investors are persuaded that security tokens can increase their rate of return, there is every reason to believe that the global capital markets could be on the cusp of a series of far-reaching structural upheavals. The purpose of this webinar is to review progress towards true delivery of tokens against fiat currency payment with settlement finality; look at developments that can overcome the practical, technical and legal challenges of safekeeping tokenised assets; assess the pioneering efforts to achieve inter-operability between different token issuance, trading and settlement platforms and between token platforms and traditional platforms and exchanges; and appraise jurisdictions which are in the vanguard of providing a settled legal, regulatory and infrastructural environment for tokenised digital assets.
Topics of discussion include:
• The meaning of settlement finality
• The role of Stablecoins: stopgap or long-term solution?
• The value of central bank digital currencies (CBDCs) in driving tokenization
• How digital assets can be custodied safely
• What progress standards-setting groups have made in facilitating inter-operability
• Which markets are most hospitable to digital assets
• Which jurisdictions offers regulatory certainty
• What issuers and investors want
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