Author: Medha Singh
(Reuters) – Large-scale trading of stocks and bonds on blockchains will remain a dream unless a global standard for cross-border activity is established that allows assets to flow seamlessly between blockchains, according to a report released on Thursday.
So-called tokenized assets – which represent the underlying assets – are exchanged on distributed ledger technology (DLT), which is also used in cryptocurrencies. Banks hope that trading in tokenized assets will become a way to make transactions faster, cheaper and more lucid.
However, the lack of consistent global regulations prevents the velvety movement of assets between different blockchains. Industry executives at an event in Amsterdam this week said progress in tokenizing assets is snail-paced and their employ is so far confined.
Customer demands and compliance requirements are too great around the world for a single, fixed solution to meet everyone’s needs, said Georgios Vlachos, co-founder of blockchain interoperability firm Axelar, which co-authored the report.
“As things currently stand, progress in different regulatory jurisdictions is at different rates and focused on different areas,” Vlachos said.
The report on blockchain trading was produced by the Axelar Foundation and digital asset risk assessment firm Metrika, with contributions from Citi, Deutsche Bank, Mastercard (NYSE:) and Northern Trust (NASDAQ:).
Deutsche Bank said in the report that it is critical to have an industry-accepted approach to risk assessment, which is necessary to facilitate adoption of these solutions.
However, “standards developed too early may deprive the industry of better-developed solutions or become irrelevant,” said Boon Hiong Chan, head of securities and technology advocacy at Deutsche Bank for Asia-Pacific.
Northern Trust expects the size of the digital asset market to grow to 5-10% of the $13 trillion in assets it holds by 2030.
According to data from Dune Analytics’ 21.co dashboard, approximately $85.12 billion in assets are currently tokenized, including government securities, fiat-back coins, and commodities.
