One of the leading global bodies on post-trade processing has spoken out on the necessity for leveling the playing field for security tokens. There must be an establishment of trust in the post-trading process, the DTCC said.
2018 was an explosive year for the security token space. 2019 was predicted to be even bigger. With platforms like Securitize, TokenSoft, and others like it leading the way, there are still many doubts over the regulatory environment. The DTCC, the global leader in ‘financial plumbing’ or post-trade infrastructure, said that the level playing field must be leveled for security tokens to succeed. The DTCC processes some 90 million transactions a day.
It’s clear now that security tokens are so visible in the financial community that even the DTCC can’t ignore it. The story was reported by Reuters today,
Regulators have so far responded inconsistently to the emergence of security tokens and other crypto-assets.
One of the consequences of this uneven policy is heightened risk. And we all know that the security token space cannot do well without trust. According to a research paper released by the DTCC, crypto-asset traders face increased risks for losing their assets during post-trade processing.
One of the problems lies, according to the DTCC, in the uneven policy towards security tokens and crypto-assets around the world. Some countries, for example, have regulated each exchange directly, while others have taken the role of “self-regulating” by trusting established entities in the space. Other nations, like China, have banned almost all cryptocurrencies outright.
What the DTCC is arguing for here is a relative unity in regulation internationally: because security tokens operate on a 24/7 global market, the standards cannot vary from country to country. This inconsistency increases risk in the post-trade process.
The DTCC stressed that crypto-assets, and security tokens, will not be embraced at large by the financial community until these issues are resolved. However, based on the report, it is clear that the DTCC remains optimistic that the necessities of such regulations will soon be felt by the the international political bodies at large.
DTCC’s full assessment of the security token industry can be read here.
What do you think of the DTCC’s suggestions? Do we need international consistency in regulations regarding cryptocurrencies? Let us know your thoughts in the comments.
Image courtesy of DTCC.