How a common platform or unified ledger could unleash network effects in the token markets

Does tokenisation have a scaling problem today and, if so, why?  Some token platforms are growing. But tokenisation as a whole is struggling to scale. This is largely because the business case for adoption is not yet clear. However, the Initial Coin Offering (ICO) bubble of 2017, the cryptocurrency crisis of 2022 and the Proofs of Concept and Pilot Tests of the early explorations of blockchain by regulated institutions were important staging posts and are in the past. The ind

What are the costs of lack of digital money on chain? The absence of on-chain money to settle the cash leg of transactions on blockchains and pay entitlements has many negative effects on the security and fund token markets. Ultimately, every tokenisation use-case depends on the availability of on-chain cash to realise its potential value to users. After all, a large part of the appeal of blockchain is its ability to capture transactions, settlements and transaction records o

Are vested interests at work? Regulated financial institutions have adopted a cautious approach to tokenisation. But the main reason is not protection of existing revenue streams. It is a concern that the existing structure of the capital markets reflects the lessons of experience, and that it would be foolish to jettison that knowledge and the safeguards it erected in pursuit of the cost savings afforded by disintermediation. That said, there are cases where incumbents resis

What do asset managers and asset owners need to know about digital asset custody and custodians? Date: December 4th 2024 Venue: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN 1 Day Event: 9.15am to 7.30pm This Future of Finance one day Digital Asset Custody Event will explore issues of pressing concern to Asset owners and their consultants; and from them to asset and wealth managers, bank (and non-bank) digital asset custodians global custodi

What is the event about? What will catalyse the growth of the tokenised securities and fund markets? Lists of obstacles to growth – lack of fiat currency on blockchains and regulatory uncertainty chief among them – are not hard to find. But the purpose of this Round Table is not to rehearse what we know already. It is to remake the case for tokenisation by identifying the problems that tokenisation solves, and the benefits tokenisation confers, asset class by asset class, and

How the obstacles to scalable tokenisation are being cleared, with special guests Andreas Ruflin of BX Digital and Benedikt Schuppli of...

This Future of Finance half day event will provide a series of interviews and panel discussions that will explore how tokenisation is...

Tokenisation of securities and funds is going to happen. How will you and your organisation survive it? The potential gains from the tokenisation of securities and funds are immense. Governments and corporates would pay less for equity and debt capital. Investors would enjoy higher returns on portfolios that cost less to create and maintain. Asset managers would distribute more profitable individualised savings products to wider audiences at lower costs. Economies would inves

Just four countries have issued a central bank digital currency (CBDC). But the CBDC Tracker suggests that interest in CBDCs is far from moribund. In September 2024 26 central banks had a CBDC at the pilot stage and another 30 at the proof-of-concept stage. A further 103 are researching the idea. The Bank for International Settlements (BIS) website lists 20 CBDC research projects in which central banks have taken part since 2016. Just seven central banks have cancelled their

It is universally agreed that lack of fiat currency on blockchains is an obstacle to the growth of digital assets. In cryptocurrencies, market forces solved this problem with the invention of the Stablecoin. Though trivial in value (US$172 billion total market capitalisation in September 2024) by comparison with the value of fiat currencies outstanding (US$215 trillion), Stablecoins have in the year to mid-September 2024 been used by about 180 million active addresses in US$4

The basic choice in digital asset infrastructure projects is between building linkages between systems or building common platforms. The difficulty the digital money and assets industries have encountered already in developing interoperability between platforms is a reminder that links require widespread if not universal agreement between market participants and introduce additional complexities and costs. Common platforms, on the other hand, can in theory achieve success thr

In theory, blockchain is an ideal technology for driving interoperability in financial markets because it puts digital money and digital assets on a single ledger shared with all parties at all times, ending the cost and complexity of coordinating multiple, siloed ledgers through complicated data exchanges between multiple intermediaries, each using proprietary systems, and it operates 24/7.  However, blockchains as they exist today do not conform to this promise. There are d

Tokenised assets issued on to blockchain networks need cash on-chain to create liquidity and drive network effects. Stablecoins and (to a lesser extent) e-money have fulfilled this role so far. Like Stablecoins and e-money, tokenised deposits offer the benefits of instant payment, atomic settlement and programmability via smart contracts.  But tokenised deposits have other advantages. They are a form of digital money underpinned by regulated banks. They preserve the "singlene

Payment services have made significant progress. Since 2008, when the Faster Payments service was introduced in the United Kingdom, instant payment around-the-clock has become a global norm. It is delivered not by blockchain technology but through domestic payments market infrastructures. In fact, payments infrastructures now process higher volumes of low value transactions and inter-bank payments more securely than ever before.  Other innovations are having an impact. Open B

Bitcoin has demonstrably failed to deliver on its initial promises. Although more than 15,000 businesses around the world accept Bitcoin as payment, and both payment service providers and credit card companies are making it easier to move between Bitcoin and fiat currency, it is still extremely hard to spend Bitcoin in a shop or restaurant.  This is not surprising, since the day-to-day value of Bitcoin is so volatile that consumers are reluctant to use it and merchants to acc

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