Part 4/4

A Future of Finance interview with Gilbert Verdian, CEO of Quant

• Incumbent financial institutions did initially retard progress towards large and liquid digital asset markets, by investing in a discovery process rather than commercial opportunities, but appreciation of the cost savings and the revenue and profit gains available from investing in and trading digital assets is now widespread, as the enthusiasm for spot Bitcoin ETFs showed.

• The criticism that most tokenisations so far have limited benefits because they are asset-backed rather than digitally native under-estimates the value of bundling and unbundling tokenised assets into new instruments and fails to recognise that tokenisation has yet to impact the global bond and equity markets in a significant way at all.

• Asset managers are in a powerful position to drive progress towards tokenisation because they have much to gain from reduced costs of investment and increased diversification of returns, and the downward pressure they are experiencing on ad valorem fees mean they also have strong incentives to push the investment banks to offer them alternatives.

• Policymakers and regulators are also in a powerful position to encourage adoption of tokenised assets by working with the private sector to devise legal and regulatory regimes that encourage the issuance of digital assets and attract institutional investors to purchase them, creating a virtuous circle that catalyses the growth of digital assets everywhere.

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Part 3/4

A Future of Finance interview with Gilbert Verdian, CEO of Quant

• Inter-operability between blockchain networks, and between blockchain networks and traditional financial markets, is essential to overcome the isolation of digital asset and traditional asset markets and so fuel their liquidity and growth, and the digital finance system must be designed and built from the outset with inter-operability at its core.

• Proprietary solutions to the inter-operability problem cannot build inter-operability into the new digital finance system from the outset, so institutions in the private and the public sectors must work together to co-design and then co-build standardised infrastructures that enable tokens to be ported seamlessly between networks at the local, regional and global levels.

• The financial market infrastructures that serve traditional assets at the pre-trade, trade and post-trade levels cannot be replaced overnight but must be integrated into the new digital financial market infrastructures, where they will persist only until the cost of maintaining them exceeds the costs of investing in the more efficient and service-rich digital alternatives.

• A unified ledger, or single programmable platform, of the kind outlined by the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and the Regulated Liability Network (RLN), will develop in layers as standardised national and regional platforms are built through private-public collaboration and start to inter-operate on a global scale.

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A Future of Finance interview with Yuval Rooz, co-founder and CEO of Digital Asset, and Eric Saraniecki, co-founder and head of strategic initiatives at Digital Asset.

In October this year, Digital Asset will celebrate the tenth anniversary of its foundation. Under the flamboyant leadership of Blythe Masters, who was CEO from 2015 to 2018, no start-up did more to promote the potential impact of blockchain technology on the capital markets. Over the five years that have passed since she stepped down, Digital Asset has transformed itself from a pioneer of institutional-grade blockchain technology for financial market infrastructures into a provider of tools for building the smart contracts that enable assets to be tokenised, and a sponsor of the public but permissioned Canton Network blockchain network. Above all, it survived unscathed the cancellation of the flagship ASX contract, won in January 2016, to rebuild the post-trade infrastructure of the Australian stock exchange. Though the current strategy can be portrayed as a pivot away from the grand visions of 2016, the company has remained remarkably consistent in its (eponymous) belief that one day all assets will be digital, and that blockchain will provide a secure technological foundation for a network of networks that will encompass tokenised securities, funds, private equity, real estate, privately managed assets, commodities, rights and royalties, and collectibles. Dominic Hobson, co-founder of Future of Finance, spoke to Yuval Rooz, co-founder and CEO of Digital Asset, and Eric Saraniecki, co-founder and head of strategic initiatives at Digital Asset, about the history of the company, its products, the use-cases it has found and exploited, the thinking and the strategy behind the Canton Network, and the challenges the digital asset industry has still to overcome.

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