A Future of Finance interview with Jürgen Schaaf, an economic adviser to the European Central Bank (ECB).

After Bitcoin first appeared in 2009 extravagant claims were made for its benefits. It would replace fiat currency as the money used by consumers in day-to-day transactions. Bitcoin would hold its value in a way that no fiat currency, being issued by central banks and intermediated by commercial banks, will ever manage. The centralised institutions profiting from the prevailing system of finance would all be disintermediated, giving way to a series of decentralised peer-to-peer networks that had no need of formal structures of trust or explicit measures to protect personal privacy. 15 years on, Bitcoin is a US$1.25 trillion speculative asset, which has proved spectacularly its uselessness as form of money and a means of disintermediation. Yet Bitcoin has remained surprisingly immune to searching criticism, in large part because its cheerleaders in social media and elsewhere have drowned out or ridiculed dissenting voices, and waged a successful (if ironic) campaign to turn Bitcoin into a respectable asset worthy of the attention of regulated banks and savings institutions. The success of these efforts in driving the value of Bitcoin upwards at a compound annual rate of 172 per cent since 2011 has not only made some of those voices extremely rich but made it hard for critics to build a sustained as well as coherent critique of the cryptocurrency. But since he published, in November 2022, “Bitcoin’s last stand,” the first of several papers questioning the economic rationale of Bitcoin, Jürgen Schaaf, an economic adviser to the European Central Bank (ECB), has developed exactly that. He spoke to Future of Finance Co-founder Dominic Hobson.

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The securities and the fund markets need to be digitally transformed. The profits of the asset and wealth management industries are being squeezed by shrinking fees and rising costs. Tokenisation of both funds and the underlying securities can, properly construed, solve the problem. Unfortunately, the overwhelming majority of tokenisations of securities and funds are more like securitisations than tokenisations. Like mortgage-backed securities, they are asset-backed. Which means they are not truly digital assets at all but mere derivatives of assets which continue to exist in their traditional form, whether that is physical (as with real estate or precious metals) or digital (an oft-cited paradox is that most securities and funds exist only as digital entries in computer systems already). As a result, the medley of intermediary institutions that has developed over decades to support the traditional funds and securities industries remains undisturbed as well. This is, of course, the attraction of asset-backed tokenisation. It threatens no incumbent business with disintermediation and requires minimal changes to the existing corpus of securities and fund markets laws and regulations. But it is also the problem, because it changes next to nothing. According to SIFMA, the revenues of the global investment banking industry alone took an average of US$92.4 billion a year out of the capital markets between 2018 and 2022. But the exchanges that list securities, the brokers that execute trades on exchanges, the custodians that safekeep securities, the fund accountants that value securities, the transfer agents that maintain registers of holders of securities, the central counterparty clearing houses (CCPs) that intermediate and net trades and the central securities depositories (CSDs) that settle trades all have to be paid as well. So it is not surprising that tokenisation of securities and funds is not taking off – it has yet to be tried seriously. This webinar will explore what true tokenisation is, what it can do for the buy-side and what it might do to as well as for the sell-side, and how to make it happen.

What topics will be discussed?

What is the difference between asset-backed and genuine tokenisation?

What explains the current preference for asset-backed tokenisation?

What new products and services does genuine tokenisation make possible?

In what ways does genuine tokenisation threaten current intermediaries?

What new opportunities does genuine tokenisation create for current intermediaries?

Are asset managers, issuers, investors and regulators supportive of change?

Do securities and fund laws and regulations have to change to accommodate genuine tokenisation?

Does genuine tokenisation require fiat currency in digital form?

What technologies will underpin the future of digital asset issuance, trading and servicing?

Who or what will make change happen?

Who is on the panel?

Rajeev Tummala, Head of Digital and Data at HSBC Securities Services

Stefano Dallavalle, Head of Product, Digital Assets at R3

Ami Ben-David, Founder and CEO at Ownera

Ralf Kubli, Board Member at Casper Association

Moderated by Dominic Hobson, Co-Founder at Future of Finance

Hosted on Acast. See acast.com/privacy for more information.

Hosted on Acast. See acast.com/privacy for more information.