Post-trade infrastructures such as central securities depositories (CSDs) could be give a huge role in supporting institutional investment in crypto assets, according to a new industry paper.
The paper by the International Securities Services Association (ISSA), as well as the CSD Working Group, identified financial market infrastructures (FMIs) as an efficient service provider of digital tokens and crypto assets.
“To bring crypto and blockchain to the next stage, we recognise that as market infrastructures, we need to see how to leverage our experience and capabilities in bringing the safety and efficiency which issuers, investors, intermediaries, and regulators typically look for,” said Walter Verbeke, global head of business model and innovation, Euroclear.
The involvement of CSDs in a governance and operational role could help increase trust of investors, and raise the quality of the ecosystem infrastructure underpinning these new asset classes, the paper added.
“We see new opportunities and perspectives in servicing digital assets in our clients’ interests, and these activities go in line with our mission – to be providers of high tech infrastructure solutions,” said Eddie Astanin, chairman of the executive board of Russia’s National Settlement Depository.
CSDs in emerging markets could also be front-runners to provide support to crypto assets, due to the fact they are smaller and more agile.
NSD’s Astanin added it is planning to develop digital technologies to fit the digitisation programme of the Russian economy, and countries such as Slovenia are also poised to adpt their market infrastructures to meet the demand for crypto assets.
“The implementation of DLT/blockchain technologies and the opportunity to support the vibrant market of crypto assets by the KDD as an established market infrastructure, promotes further development of the Slovenian financial market and ensures its integration into a modern and increasingly digital international financial market,” added Boris Tomaz Snuderl, president and CEO of Slovenia’s Central Securities Clearing Corporation (KDD).
Earlier this year, Swiss-based SIX became the first major market infrastructure to announce an integrating trading, settlement and custody offering for digital assets, which will launch in 2019.
SIX plans a phased approach for what is an ambitious and comprehensive initiative. The first step is to build a regulated exchange platform for digital assets and then to offer a service to tokenise existing bankable assets.