The International Securities Services Association (ISSA) has released its latest DLT in the Real World survey. In a year when the importance of distributed ledger technology (DLT) and digital assets has risen to new heights, 2024 has been a massive year in the evolution journey of this new technology. If 2023 was the year of stabilization (after the challenges of 2022), this year must be characterized as the year that DLT has gone “deeper, not wider”.
Among its findings is that digital liquidity is forming as a result of costs, revenues and liquidity, replacing learning as drivers. In that context, securities financing and collateral are identified for cost savings, new revenues and treasury benefits.
As the number of live DLT applications increases, respondents are experiencing the challenges of deployment and adoption for the first time – and moving from the controlled world of a test environment to a live, commercial DLT application is a big leap. of the blocks, 79% of respondents identified limited liquidity of tokenized securities (inc. secondary market, financing, etc.)
Whilst continuing questions around regulatory certainty stand in the way of much native digital asset activity, 2024 has seen the landscape for tokenization advance significantly – to the point where it now forms the majority of DLT and digital asset activity around the world. Reinforced by regulatory guidance from authorities around the world, firms are now increasingly confident in their ability to treat tokenized securities in the same way as they do the traditional underlyings (in terms of accounting, risk, etc.), so long as the ‘pegging’ between the two is entirely resilient. Regulatory obstacles are falling away.
This opens up extensive possibilities and has facilitated the tokenization of all kinds of assets in 2024, including “trillions of dollars” in collateral.
