Digital assets can represent equity, bonds, derivatives, ETF (exchange traded fund), and non-financial ascollections such as arts and crafts, real estate, and automobiles. Digitalization of illiquid assets such as private equity can make the asset more accessible and reduce the expense of investment life cycle through reduced TAT (turnaround time) and automation.
A digital asset-based capital market reduces capital requirements, accelerates international fund transfers, and resolves asset availability issues faced by investors. Additionally, it helps eliminate inefficiencies that cost delays and unnecessary expenses.
It’s important also to remember that this is of exactly what a digital asset is constantly changes with technology. As new digital file formats are invented, they can be included with the list.
However, there are still three constants a digital asset must tick because of it to be classified as you:
It must be valuable to the company
It must be a digital file
It must be easily accessible, searchable and distributable
Why are Digital Assets Important?
Although digital assets aren’t physical products or something you can touch, they’re still immensely valuable to your small business.
Think about each and every time you want to build a marketing campaign or launch a product. What do you need?
Images and videos explaining your product help sell it, logos and branding help customers recognize it, and presentations and spreadsheets help you organize the marketing or sales campaign for it. These elements is impossible to do with out a well-organized database of digital assets available.
In fact, digital assets are so important that companies are now spending between $150 million and $250 million on digital content activities every year. 60 that sometimes that investment isn’t being used wisely.
On top of that, the study also found 46% of teams waste time by uploading and downloading digital assets into a couple of different tools rather than by using a core database. Rather than teams working efficiently to build campaigns or graphics, your team is likely searching through random folders and tools looking for asmodels like logos or presentations.
So, the challenge that most companies face when it comes to digital assets is actually not too difficult to solve. Digital ascollections are essential. They add value to your company. You merely need to find a much better way to organize, access and distribute them.
Adoption across markets
The demand for digital assets is rapidly increasing across segments. According to a survey conducted by a respected financial services firm, conventional investors such as hedge funds and family offices in all leading markets have increased their contact with digital assets. Most investors have an optimistic perception of digital aspieces.
Talos is removing the barriers to wide-scale crypto adoption by providing buy-side institutions and service providers with technology infrastructure that powers the full trade lifecycle.
At Talos They are building upon best practices from both traditional markets and the crypto ecosystem, incorporating best-of-both-worlds expertise into an extensible digital asset trading platform that enables institutional market participants to interact seamlessly with each other via a single point of access.
The Talos Trading platform was built exclusively to aid the entire digital asset trade lifecycle – from price discovery to execution through settlement – across spot, futures, and FX markets. Made to exceed the performance, reliability and security requirements of large institutions, the Talos platform can be found via a single API or advanced, web-based GUI and can be tailored to meet your unique workflow requirements.
Regulators’ view
Regulators across the earth have recognized the necessity and have accordingly framed rules for the challenge and trading of digital assets. Regulations in this context are evolving rapidly.
Early birds of digital assets adoption
Introduction of digital assets has varied effect on the entities in capital markets. We attempt to fully capture the nature of impact on the organization of various entities. I envisage the following stakeholders as early birds:
Custodians
Custodians will offer custody services for these assets. Digital ascollections are secured with a cryptographic key, which is effectively a digital bearer instrument, and provides holder complete control of the asset.
Custodians must store these cryptographic keys on behalf of your client. Custodians who can manage private keys will offer services around assets such as cryptocurrency, securities, a bit of real estate, or non-fungible tokens (NFT). Many custodians such as BNY Mellon have announced the introduction of digital custody and administration platform for digital ascollections.
Investment banks
Digital assets provides a new earnings stream as a new asset class. Investment banks can benefit from higher operational efficiency due to faster collectiontlement, lesser reconciliation, and better liquidity. Taking into consideration the regulatory uncertainties and risks, it is expected that investment banks will advise clients on minimal allocation in this asset class. However, emergence of new trading venues can impact investment banks due to disintermediation.
Broker dealers
Broker dealers may reap the benefits of new revenue streams like prime brokerage for crypto assets and crypto custody. Broker dealer functions become more efficient and simplified due to the requirement of lesser reconciliations and accelerated settlement on digital assets.
Issuers
Digital assets provide multiple benefits compared to a conventional issuance of asset. Issuers could create NFTs and offer better liquidity, thereby reducing the transaction costs. Digital assets are becoming initial investment categories, and retail investors are buying this asset class.
Investors
With digital assets, investors will have the ability to achieve fractional ownership of financial and non-financial assets, due to which digital assets provide increased liquidity and accelerated settlement.
Asset managers
Digital assets create potential opportunities for new business from new asset classes and greater operational efficiency for asset managers.
Exchanges
Exchanges can benefit from trading in new asset classes. Many non-financial assets can be traded as tokens. SIX Digital Exchange (SDX) has received the regulatory go-ahead to use a stock exchange and a central securities depository for digital assets in Switzerland.
Market infrastructure – central securities depository (CSD)
Market infrastructure organizations will benefit from clearing and settlement of transactions in newer asset classes, will gain operational efficiency and could play the role of operator of blockchain platforms. However, there may be loss of new business due to disintermediation. Existing centralized infrastructure will continue with distributed ledger technology, facilitating newer business.
Conclusion
In the past, there was lack of clarity from the regulators regarding adoption of digital technologies, however, regulators have recognized the need for digital action. Digital assets can be mainstream over the following number of years and will be widely accepted.
