Major Stakeholders of Digital Assets

Digitalization of illiquid assets, such as private equity, enhances asset accessibility and lowers investment life cycle costs by shortening turnaround times and automating procedures. With a capital market based on digital assets, investors' concerns about asset availability are alleviated, capital needs are decreased, and international cash transfers are accelerated. It also aids eliminate inefficiencies that create delays and additional costs.

Acceptance in Many Markets

Demand for digital assets is quickly increasing across all markets. According to research, traditional investors like hedge funds and family businesses have increased their exposure to digital assets across all key markets. The majority of investors have favorable views about digital assets.

Regulators' Perspective

Regulators throughout the world have realized the need and have enacted laws to govern the issuance and trade of digital assets. Regulations in this field are evolving swiftly at the moment.

Early Adopters of Digital Assets

The emergence of digital assets has affected participants in the financial sector in many ways. We try to comprehend how various firms' daily operations are influenced. Early investors in digital assets include:

Custodians

Custodians offer custody services for these assets. Digital assets are secured by a cryptographic key, which effectively serves as a virtual bearer instrument and gives the possessor complete control over the asset.

Custodians maintain these cryptographic keys' security on the client's behalf. Assets such as non-fungible tokens (NFTs), equities, real estate, and cryptocurrencies can all be handled by custodians who are adept at managing private keys. Several custodians, including BNY Mellon, have declared the development of a platform for the administration and custody of digital assets.

Bank investments

Digital assets, a new asset class, have the potential to provide a new revenue stream. Investment banks can profit from increased operational efficiency as a result of high liquidity, faster settlement, and less reconciliation. Given the regulatory risks and uncertainties, it is predicted that investment banks would advise customers to allocate as little as possible to this asset class. The advent of new trading venues, however, might have an impact on investment banks owing to disintermediation.

Issuers

There are many benefits when comparing the issuing of digital assets to those of traditional assets. Issuers may develop NFTs to increase liquidity and reduce transaction costs. Retail investors are increasingly making early investments in digital assets.

Investors

With the aid of digital assets, which boost liquidity and hasten settlement, investors will be able to purchase a piece of both financial and non-financial assets.

Asset Managers

Digital assets lead to both increased operational efficiency for asset managers and potential opportunities for additional revenue from new asset classes.

Exchanges

Exchanges may gain from trading new classes of assets. You can trade tokens representing a range of non-financial assets. The Swiss regulator has authorized SIX Digital Exchange(SDX) to maintain a stock exchange and a central securities repository for digital assets.

Depository for central securities

Market infrastructure firms will gain from clearing and settling transactions in fresh asset classes, be able to run blockchain platforms, and boost operational efficiency. Disintermediation, however, can lead to a decline in new business. The current centralized infrastructure will endure thanks to distributed ledger technology, facilitating extra new businesses.

Conclusion

Previously, authorities were unclear about how to apply digital technology, but they now appreciate the need of taking digital action. In the next years, digital assets are expected to proliferate and become more popular.