Future of Finance


The Future of Finance Institute paper, Priorities, Projects and Barriers to the Growth of the Digital Asset Markets

The Future of Finance Research Institute paper, Priorities, Projects and Barriers to the Growth of the Digital Asset Markets, provides a snapshot of the attitudes of a dozen different types of institution as the crypto-currency and Decentralised Finance (DeFi) markets entered their first bear market for four years during the Winter and Spring of 2021-22. 

Based on a poll of buy- and sell-side institutions, market infrastructures, technology vendors and consultants drawn from both the crypto-finance industry and the traditional financial services industry, the paper documents the adoption of a blockchain-based approach to the future that is proving highly resilient to the downturn:  

  • The current bear market has not killed interest in digital assets: half the respondents are expanding, launching or running a digital asset service for their clients
  • The major reason for continued engagement is the massive potential for tokenisation, not just of securities but of real estate and privately managed assets 
  • Tokenisation is a priority for traditional financial market infrastructures, brokers and custodians and the new breed of digital exchanges but also for crypto-currency exchanges
  • The relative lack of engagement by central securities depositories (CSDs) with tokenisation is surprising, given the threat it poses to their current operating model (1)
  • The principal obstacle to more rapid progress is not current bear market developments but regulatory uncertainty – and that is true of unregulated as well as regulated firms
  • Removing regulatory uncertainty will do the most to accelerate buy-side engagement with digital assets, bringing institutional money to the market 
  • Other barriers to progress include the cost of modifying legacy systems and lack of inter-operability between blockchain-based and traditional networks
  • The introduction of Central Bank Digital Currencies (CBDCs) is a priority for traditional institutions concerned about loss of settlement revenues
  • The introduction of a CBDC in one or more major currencies is the key to rapid growth in security token issuance and trading 
  • Distinctions between crypto-currencies, tokens, DeFi, Stablecoins and CBDCs make limited sense to market participants interested primarily in using novel technologies to make money

(1) https://futureoffinance.biz/future-of-finance-institute/

To read the summary and the full report see below

For further information please contact Wendy Gallagher on wendy.gallagher@futureoffinance.biz