Digital Asset Securities ATS’s are in their infancy, and although there are currently only a handful, there are many more undergoing the registration process. 

The demand for liquidity will increase the need for ATSs to support secondary trading of these securities. New listings combined with access to formerly untapped assets will help to increase the digital asset security market cap by 3x in 2022.

 

Tokenization is the evolution of all existing assets and product structures. Blue Chip companies and publicly traded institutions will continue to tokenize assets in order to reduce operating costs and gain access to assets with traditionally high barriers to entry. The tokenization of real estate will be first, followed by equities, as investors seek the benefits that blockchain can deliver; speed, certainty and immutability.

 

We have seen a movement by financial incumbents towards utilization of blockchain technology to replace legacy infrastructure. The first experiments were distributed ledger based, followed by transactional proof of concepts.  Next we will see the evolution to digital asset securities for settlement, liquidity management, collateral management and other US Dollar proxy workflows.

 

It’s no surprise that publicly traded and regulated financial institutions are reluctant to participate in the digital asset ecosystem because of the perceived uncertainty. However, while they wait, more nimble, private companies are gaining competitive ground. We predict the release of a regulatory framework, followed by the implementation of corporate innovation projects, and a flood of capital will lead to the adoption of digital asset securities by many highly regarded companies.

 

Over the past decade, innovation in the digital asset ecosystem has been largely driven by start-up companies and first movers.  These pioneers differ vastly from their larger, older and bigger incumbents who view blockchain as unfamiliar territory. This unlikely duo will collaborate to build products and solutions that are made possible by the competences of each partner.