As the overall proliferation of cryptocurrencies grows, global rules continue to promote and recognize decentralized technologies as an appropriate infrastructure to eliminate the physical nature of securities. In Luxembourg, the country with the second largest assets under management in the world, the national regulator enacted legislation that explicitly recognizes the use of distributed ledger technology to eliminate the physical nature of securities.
Regulation is spreading rapidly across Europe: Coded securities are now subject to the same rules and regulations as traditional financial instruments in many other European countries, including France, Switzerland, Germany, Italy, the Netherlands, Romania, Spain and the United Kingdom.
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What’s next for the industry? With increasing public acceptance and favorable regulations, the demand from the financial industry for access to digital networks is increasing. So far, banks have digitized retail, but little has changed in the capital markets.
The digitalisation of this industry is now possible with blockchain, an infrastructure that is now recognized by the world’s largest authorities for financial instruments. Money and asset managers can now modernize their distribution channels by opening up digital asset or DAM markets and connecting to others through decentralized networks.
DAM will help its customers discover new opportunities, manage investments and even unleash the potential of the secondary market. In this ebook, industry participants explain how capital market participants can take advantage of blockchain by launching DAM and maximizing revenue generation from their investor base.
Financial institutions have begun to embrace and openly embrace this technology. As expected, they started from the beginning of cryptography. Once they begin to rely on technology and become an integral part of their portfolios, it will mean one thing: curiosity will peak and these organizations will realize the operational benefits of decentralized technology.
With the growing confidence in technology and DeFi’s drive to replace many of the traditional banking functions, institutions will begin to realize that technology can solve long-standing and deep-seated industrial problems, especially in opaque and highly illiquid private markets.
According to the study, the driving forces behind this will be digital asset markets – that is, primary and secondary places where investors meet. However, open source standards such as regulated exchange tokens are essential to enforce chain compliance in a highly regulated world.