Crypto securities have gained numerous achievements in Europe since 2017. Recently, do crypto securities receive a similar bright victory in ASIA?
Investors, entrepreneurs, regulators, and the general public continue to be fascinated by cryptocurrency. Significant price movements, assertions that the cryptocurrency market is a bubble with no underlying worth, and worries about evasion of regulatory and legal monitoring have sparked a lot of recent public discussions regarding cryptocurrencies. These issues have prompted calls for tighter regulation, if not outright prohibition.
Digital securities, backed by the blockchain and distributed ledger technology (DLT), are ushering in a new era in asset management. Regulators are implementing steps to promote the growth of the market as digital assets gain popularity, and conventional investors, asset managers are gradually shifting their business models to the digital arena. But who is driving these changes, who stands to gain from them, and what exactly are the benefits?
Some theories about the origin of digital assets
The original developers consciously attempted to develop a digital transfer mechanism that corresponded to the direct exchange of physical cash used for payments or other financial assets such as precious metals. Cash is exchanged through physical transfer, but the term “cryptocurrency” and other terminology called “coin” or “wallets” in the original whitepaper are proposed by the supporting technology for Bitcoin (Nakamoto 2008).
What about digitally recorded financial assets (such as bank deposits, shares, and bonds, but not bearer bonds or banknotes)? The information system maintained by a financial institution determines who is entitled to any income or other rights it gives, as well as who has the authority to sell or transfer these assets. These systems were originally paper-based, but since the 1960s, they have relied on mainframe and, more recently, computer systems.
Cryptocurrencies are part of a larger class of financial assets known as “crypto assets,” which have comparable peer-to-peer digital value transfers without the use of third-party organizations for transaction verification. What makes cryptocurrencies different from other crypto assets? This is dependent on their intended use: whether they are given just for transfer or also serve other purposes.
Classification of digital assets
We differentiate categories of crypto assets as follows:
- Cryptocurrencies are a type of asset on a blockchain that can be exchanged or moved between network participants and hence used as a form of payment—but with no additional benefits
- Crypto securities are a type of blockchain asset that also has the potential for future payments, such as a portion of profits.
- Crypto utility assets are blockchain assets that may be redeemed for or used to get access to pre-defined products or services.
Crypto securities emerge in ASIA
Smart contracts enabled by blockchain technology are smoothly utilized in the securities market to prohibit regular investors from acquiring securitized tokens they are not eligible to hold. They can include sophisticated international know-your-customer and anti-money-laundering regulations. As a result, technology that has occasionally seemed to perplex securities regulators assists in safeguarding investors by enforcing securities ones.
Paroche Hutachareon, a renowed specialist on the bond market at the Public Debt Management Office of Thailand has announced that the bank of Thailand has been highly engaged in the digital asset arena. They have leveraged DLT or crypto securities to cut bond settlement periods from 14 days to just two.
Alexandre Kech, CEO and co-founder of Onchain Custodian discussed recent developments in Singapore, noting that the city state’s regulators have been generally receptive and forward-thinking of open finance service for digital assets. The Payments Service Act has been enabled so organizations dealing with digital payment tokens or E-money in the form of crypto exchanges or custodians, need to get a license and adhere to severe regulations.
On the subject of securities tokens, the Monetary Authority of Singapore (MAS) maintains that digital security is still security, implying that existing regulations are unaffected. Meanwhile, in September 2020, the Singapore Exchange (SGX) released its first digital bond. This action is the greatest breakthrough in the ASIA securities market that promise a positive future for this industry
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since its establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/
Contact us for more information:
Phone: +84 90 1133883
Addresses: FPT Tower, 10 Pham Van Bach street, Cau Giay district, Hanoi