Where Finance Finds Its Future

When it came to digital money useable on blockchain networks, the choice between central bank money and commercial bank money used to feel binary: Stablecoins and tokenised deposits and e-money were stopgaps pending the introduction of CBDCs. But as the threat of Stablecoins that were either global or issued by unregulated non-banks has receded, a more traditional hierarchy of money has asserted i...

There is now widespread acceptance that digital assets are going to co-exist alongside traditional assets for a long time. That implies that issuers and investors will need a market infrastructure that renders issuers indifferent as to whether a source of liquidity is digital or traditional and investors indifferent as to whether an exposure is available in digital form or in traditional form. Bot...

The decision by regulators to bring bank-issued Stablecoins within the scope of regulation is helping to fashion a vision of the future of money in which central bank digital currencies (CBDCs) play a role not unlike the one existing forms of central bank money play in the money markets of today: underpinning innovation and experimentation in different forms of money and different ways of making p...

Privately managed assets have become the default choice for tokenisation enthusiasts. The reasoning behind their choice is hard to fault. The advertised benefits of tokenisation apply a fortiori to the asset class. Privately managed assets – especially hedge funds and real estate, but also equity issuers that might previously have used the private placement or crowd-funding markets to raise capita...

Tokenisation may be making limited headway in the conventional securities markets but it is attracting considerable interest in less familiar asset classes. 360X, the digital assets marketplace backed by Deutsche Börse and Commerzbank, aims to tokenise rights in expert-verified and high-quality art, music and (in cooperation with Tectrex) real estate assets. 360X Music, which provides an...

Securities are issued into CSDs. The integrity of every issue of securities is safeguarded by CSDs. Ownership of securities is recorded by CSDs. Transactions in securities are settled by CSDs. Securities are serviced by CSDs. So, if it happens, tokenisation will either disrupt or transform or eliminate these functions. It is therefore both an existential threat and an exciting opportunity for CSDs...

Digital asset enthusiasts are finding that neither issuers nor investors are ready or able yet to let go of high levels of intermediation. Historically, keeping track of investors is the responsibility of the registrar who, in a blockchain-based future is made redundant by a digital ledger that is updated automatically every time an asset changes ownership. Small and medium-sized enterprises (SMEs...

Four years have elapsed since the Swiss stock exchange (SIX) took the bold decision in 2018 to respond to the challenge tokenisation has issued to traditional securities exchanges. SIX opted to build alongside its existing infrastructure an entirely new, blockchain-based trading, settlement and custody platform for digital assets. In September 2021 the SIX Digital Exchange (SDX) received its opera...

Tokenised funds exist already in the United States and Singapore. Asset managers are not only issuing tokenised funds but backing projects whose ambition is to facilitate the large-scale tokenisation of shares in mutual funds. What are the benefits they see? In this podcast, the coming tokenisation of the mutual funds industry will be discussed, in terms of the incentives to change, the techniques...

Safe custody is the service that will unlock corporate issuance and institutional investing in the securities, asset-backed, non-fungible and fund token markets. While there is widespread recognition that regulation of digital asset custodians would accelerate progress, regulators around the world have so far reached consensus on combating financial crime only. Even that is proceeding slowly and p...

The global Pandemic tested established operational resilience procedures in unexpected ways. It made redundant some conventional solutions, accelerated the digitisation and digitalisation that regulators were already fretting about, and prompted a concerted push by regulators around the world for financial institutions to enhance their operational resilience to the novel and rapidly mutating threa...

One major frustration for digital asset markets enthusiasts is the stubborn refusal of security token issuance to, in the famous phrase of Walt Rostow, take off into self-sustaining growth. After all, the benefits seem plain enough, and cutting the all-important cost of capital is chief among them. So what is holding issuers back? Part of the answer lies in the fact that the natural pioneers of Se...

The slow and steady convergence of blockchain-based finance and traditional financial markets is now a widely accepted prognosis. True, the implosion of values on the cryptocurrency and decentralised finance (DeFi) markets since the autumn of 2021 has made convergence seem the obvious path in the future. But the acceptance of this possibility by all but the most unreconstructed voices at either en...

Traders active in the cryptocurrency and decentralised finance (DeFi) markets have long found the operational infrastructure of the industry frustrating. Settlement of trades is slow and expensive. Worse, settlement requires them to be fully funded. To alleviate the costs and complexity, the obvious solution is to create closed circles of trustworthy counterparts. Several providers now offer servi...

A presentation by Dr Ian Hunt on his recently published paper, Digital Issuance - An Optimal Model for Digital Assets and Transactions, was followed by a discussion with an expert panel and the members of an invited audience, moderated by Future of Finance co-founder Dominic Hobson.  Margin pressure exerted by institutional investors and passive investing means asset managers must cut costs b...

According to Willis Re, there are around 3,000 self-proclaimed InsurTechs at work in the world today. The age and size and funding and technologies of InsurTechs is so various, and the range of activities they pursue so immense, that it is difficult to comprehend which innovations are working and which are not. The use of video and telemetrics, such as the admission of photographic evidence and se...

The future of blockchain now hinges more than ever on moving beyond crypto-currencies to create the universe of decentralised products and services that almost all characterisations of Web 3.0 endorse. These products and services will make use of the smart contracts pioneered by the entrepreneurs that created the Decentralised Finance (DeFi) and Non-Fungible Token (NFT) markets and which are now b...

Liquidity in privately managed assets is hampered by a lack of reliable and timely data about asset values. If value is hard to discern, privately managed assets are more difficult to buy and sell, harder to use as collateral and suffer from a less favourable accounting treatment. It is also difficult to develop secondary markets in which the assets can be traded.  A distributed technology su...

SDX, the digital arm of the Swiss stock exchange, has launched an income-generating crypto-currency staking service for clients of the private banks in Switzerland. Owned and operated by a separate entity within the group, the Cloud-based service enables holders of crypto-currencies to collect a yield on their portfolios by staking their assets to claim the rewards for validating or attesting bloc...

FQX is a blockchain-based issuance platform for tokenised debt. Founded in Zurich in 2019, the start-up has invested as much time and money in the legalities as the technology and can now offer issuers near-certainty over the status of their security token offerings in legal and regulatory terms across six jurisdictions. The initial focus is on short-term corporate debt, with the aim of normalisin...

Concordium is a Layer 1, Proof-of-Stake blockchain with its own cryptocurrency. So far, so normal. But Concordium also has a fascinating twist: it incorporates digital identification functionality at the level of the protocol. If predictions of the eventual universality of digital identity are even half-fulfilled, this feature will give Concordium an edge over other Layer 1 blockchains as the...

10xbanking is not your average provider of Cloud-based banking Software-as-a-Service (SaaS). The company is the brainchild of former Barclays Group CEO Antony Jenkins, who has since leaving the British bank in 2015 embraced the idea of transforming the industry by full digitisation of its infrastructure and operating platforms. 10x has raised more than $252 million to its Series C in June last yea...

The peer-to-peer system of cash outlined by Satoshi Nakamoto in his famous paper of October 2008 did not mention regulators or regulations. But its ambition of dispensing with trusted third parties did mean jettisoning regulated financial institutions. Nearly 14 years on, only the irreconcilable libertarian wing of the Blockchain industry still considers regulation of cryptocurrencies to be unthin...

A Future of Finance Webinar that investigates whether the adoption and impact of Blockchain could be accelerated by pursuing an infrastructural strategy that lowers the cost of adoption, recovers the openness of the early Internet and facilitates inter-operability between different networks. A major economic mystery is why a general-purpose technology such as digital computing has not transformed...

A Future of Finance interview with Thomas von Hohenhau and Marcel Fleisch from V Bank. Liechtenstein is one financial jurisdiction which has embraced the blockchain enthusiastically. It has since January 2020 had in place comprehensive legislation covering all aspects of tokenisation in the shape of the Token and Trustworthy Technologies Service Provider Act (TVTG). The Act is, says VP Bank, one o...