As public adoption of crypto assets increases, global regulations continue to advance and recognize decentralized technologies as a suitable infrastructure for the dematerialization of securities. In Luxembourg, the second country in the world in terms of assets under management, the country’s regulator has adopted a bill explicitly recognizing the possibility of using distributed ledger technology for the dematerialization of securities.
Regulations are changing rapidly elsewhere in Europe: tokenized securities now come under the same rules and regulations as traditional financial instruments in many other European countries, including France, Switzerland, Germany, Italy, the Netherlands, Romania, Spain and the United Kingdom.
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What future for the industry? Due to increasing public adoption and favorable regulatory environment, demand from the financial sector to access digital networks is on the rise. So far, banks have digitized the retail industry, but little has changed in financial markets.
The digitization of this industry is now possible thanks to blockchain, an infrastructure now widely recognized by the world’s largest governments for financial instruments. Funds and asset managers can now upgrade their distribution channels by launching Digital Asset Marketplace (DAM) and connecting to others through decentralized networks.
DAMs will help their clients to discover new opportunities, manage their investments and even open up opportunities in the secondary market. In this ebook, industry players explain how players in the capital market can benefit from blockchain by launching a DAM and maximizing the monetization of their investor base.
Financial institutions are beginning to adopt and publicly adopt the technology. So far they have started, as expected, with cryptoassets. Once they start to trust the technology and have it integrated into their wallets, that will mean one thing: curiosity will peak and these institutions will realize the operational benefits of decentralized technology.
Driven by increased confidence in technology and driven by DeFi replacing many traditional banking functions, institutions will begin to learn that technology can solve long-standing and deep-rooted industrial problems, especially in opaque and highly illiquid private markets.
According to the study, digital asset markets – the primary and secondary places where investors meet – will drive this. However, open source standards such as the Token for Regulated Exchanges (T-REX) are needed to enforce on-chain compliance in a heavily regulated world.