[ I N D E P T H | D I G I T A L A S S E T S ]
challenge the assumption that just because we can operate markets 24 / 7 , as we see with crypto , that we should operate markets 24 / 7 ,” argues Trenholme .
“ Ultimately , if you think about the notional of assets that have been tokenised today , it ’ s still a drop in the ocean compared to the size of traditional finance . As such , it is easy to have a certain scepticism about how meaningful and relevant this could be if you are sat within a traditional business . There ’ s a lot of promise , and the technology could improve the market considerably , but it hasn ’ t reached a scale yet where it ’ s forced clients to alter the way that they trade . That tipping point has not yet been reached .”
Moving forward Despite the current operation of digital assets and traditional finance as two separate parallels , digital assets ’ influence is evident in the increasing integration of blockchain technology into financial infrastructure .
Institutions are exploring tokenisation of assets , converting traditional assets into digital tokens to enhance liquidity and improve accessibility .
Hock tells The TRADE that Union Investment are one of the first asset managers in this area combining the traditional asset world with the tokenised world .
“ For us , our view is that within three to five years of tokenisation of assets – not only of traditional assets but also of products which are not tradeable and are not fungible today – this will become a new normal . It is important to highlight that we are not only talking about assets on chain , but also cash on chain , i . e . e-money . This consideration will be most powerful .
“ The role that institutions play in this space is to find ways to enhance investor safety .”
DAVID NEWNS , HEAD OF SIX DIGITAL
EXCHANGE ( SDX )
“ Looking five years down the road , I ’ m sure tokenisation will become a key topic here for the entire ecosystem and has the potential to be a disruptor and a game changer for the financial industry .”
Digital assets are here to stay and their influence on traditional finance is undeniable . Although still a small fraction of the entire financial ecosystem , it ’ s clear that digital assets , the innovation linked with them , and the lessons learned from the asset class are influencing the way in which future developments within traditional will be approached .
60 // TheTRADE // Q1 2024