[ I N D E P T H | D I G I T A L A S S E T S ]
phrase ‘ don ’ t fix what isn ’ t broken ’ comes into mind . Traditional financial markets have existed for much longer than digital assets and because of that , any major shifts should be carefully considered .
“ Looking at the intersection between blockchain and traditional banking , traditional banking has so much efficiency already , despite what you might sometimes hear . It ’ s highly optimised , it ’ s very efficient , but there are areas that we can certainly bring significant benefits through blockchain technology ,” highlights Newns .
“ To get the fundamental benefits , it ’ s hard work and it ’ s all about building and getting all the various participants comfortable . In crypto you ’ re taking traditional structures and you ’ re trying to accommodate a new asset class into them . In tradfi , however , we ’ re trying to get an existing asset class and then bring it into a new technology , which can be difficult .”
Where parallels meet Traditional finance and digital assets typically operate as
“ Crypto challenges the way that traditional markets operate and have grown to operate over the years .”
DUNCAN TRENHOLME , GLOBAL CO-HEAD OF DIGITAL ASSETS AT TP ICAP
two parallel and distinct markets at present , but increasingly there is overlap between the two . Settlement , something that tends to be instant within digital assets – particularly when it comes to cryptocurrencies – is something we see influencing the traditional financial landscape .
However , there is still a lot of work to be done on either connecting the two systems or uplifting the traditional financial systems to be able to support digital assets .
“ In traditional finance , we ’ ve moved to shorter and shorter settlement times . Within securities markets we are currently discussing how to move to T + 1 settlement from T + 2 and make sure we avoid trades failing at scale ,” says Trenholme . “ Within crypto they ’ ve started with the premise of moving collateral within minutes or hours . Crypto challenges the way that traditional markets operate and have grown to operate over the years .”
Looking at what can be learned from digital assets , legacy systems and the need for increased modernisation to
58 // TheTRADE // Q1 2024