Many financial institutions across the globe have either been working to integrate and expand their offerings and investments related to digital assets, or else they have realized they can no longer take a “wait and see” approach. As they formulate their strategies, they still are seeking the benefits of disintermediation that digital assets offer. But they are also looking for the risk management and secure infrastructure that they have come to expect from mature institutions. Essentially, investors are demanding an infrastructure for digital assets that is comparable to that which exists for traditional assets. Three key considerations are driving this demand:
With the increasing relevance of digital assets clearly established, institutional demand for a global infrastructure to provide stability and safety is evident. Investors expect the same institutional level of service as in the traditional space. In addition, institutional stakeholders of all stripes require stable, reliable servicing of the entire asset lifecycle from issuance to custody, trading, and settlement to core fund servicing, accounting, and payments. Such requirements fall into three categories:
Because digital assets and markets are inherently tightly connected, delivering on these requirements takes close collaboration within the industry and with fintech providers. In the world of traditional assets and markets, asset owners, asset managers, institutional investors and service providers already work closely together. Similarly, collaboration will be essential for bringing digital assets to full maturity. If technology developers, financial infrastructure and service providers, and stakeholders along the whole value chain come together to create and deploy integrated solutions, rather than a collection of one-off innovations, the end result will be much more robust.
Just as traditional markets have evolved by means of collaboration among stakeholders, we believe the same must be true for digital assets, albeit more quickly. Decentralization is a built-in feature of the distributed technologies that underly digital assets. As we stand at the cusp of digital assets becoming institutionally ready, we expect the emerging world to be “multi-centered,” with global institutions and their collaborative partners all playing their part. This new ecosystem, which must be grounded in both trust and innovation, will provide significant opportunities for growth.
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