The session began with Paroche Hutachareon, senior expert on bond market development, Public Debt Management Office Thailand covering the latest developments in the country. “The Bank of Thailand has been very active in the digital asset space, having leveraged DLT to reduce bond settlement times from 14 days to just two,” he told delegates.

More recently, he has been involved in a project that saw the Thai government launch a savings bond using blockchain technology¹. “Savings bonds are traditionally sold to people over 60 who are sitting on a lot of wealth and are wanting some extra reward,” he explained. “We thought blockchain technology could help promote financial inclusion, allowing us to lower the unit for investment to encourage the younger generation and those in lower income groups to also have access to this financial asset.”

Developments in Singapore were covered by Alexandre Kech, CEO & co-founder of Onchain Custodian, a custody and open finance service for digital assets, who noted that the city state’s regulators have been relatively favourable and forward looking. He added that “the Payments Service Act has been enabled², which stipulates that entities, such as crypto exchanges or custodians dealing with digital payment tokens or E-money in the form of stable coins, will need to obtain a licence and will have to comply with stringent procedures.”

On the securities token side, the Monetary Authority of Singapore’s (MAS) stance is that a digital security remains a security, which reflects no real change to existing regulation. Meanwhile, the Singapore Exchange (SGX) issued its first digital bond using blockchain technology in September 2020, with the objective of making it a pilot programme³.

Alessio Quaglini, CEO of digital asset custody platform Hex Trust, agreed the webinar’s dominant theme is that regulation is fast becoming clearer. In Hong Kong “we’ve seen the Securities and Futures Commission granting the first licences to broker dealers, as well as exchange platforms in principle, and they are also putting together a framework for asset managers operating in the space.”

For Samar Sen, Global Head of Digital Products and Client Connectivity, Securities Services, Deutsche Bank, now is the perfect time to be discussing digital assets. In July 2020, the Office of the Comptroller of the Currency (OCC) in the US issued a letter⁴ outlining how US banks can interact with cryptoassets. In Switzerland, the Swiss Financial Market Supervisory Authority (FINMA) is already trying to build a secondary market for tokenised securities, while, in Germany the financial regulatory authority, aka BaFin, has started giving guidance on how to be a licensed crypto custodian. So, he concludes, “we are seeing a lot of movement in this space – not just in Asia, but around the world”.

Reflecting on the current state of play, Avaneesh Acquilla, Chief Investment Officer, Arrano Capital, referenced the very unregulated Initial Coin Offering (ICO) boom of 2017, which was driven by a number of bad actors and tarnished the industry’s good name. “I think that needs to be cleaned up a little, and I think the move forward in regulation is certainly helping in this respect,” he commented.

So regulatory momentum is building, but who stands to benefit from these developments in the digital asset space? Sen reported that clients tell him they are excited about digital assets for a host of different reasons. “Some of the early adopters were in wealth management, so that is one potential area, where customers already hold these assets but maybe want to do so in a trusted, insured way.

“Beyond that, and in view of some of the regulatory announcements, we’re seeing many other client types emerge. Some of our traditional asset managers, for instance, are starting to open digital asset desks or funds within their portfolios – so this could be an interesting pilot client for us. I have also spoken with sovereign and pension funds who are looking to this space, though many face investment committee challenges in getting this allocation right. Finally, we are now even seeing opportunities with corporates, such as PayPal, as well as a number of fintechs.”

Deutsche Bank’s policy, he explains, is to be agnostic to the different standards or marketplaces emerging: “We want to be able to connect our customers with these various new digital asset classes and safely keep them at the same time.”

Not everyone is yet so bullish on these developments, however. Attendees’ responses to a poll asking “what is your view on digital assets?”, suggested that the panellists still had their work cut out when it came to convincing clients to invest in digital assets – with 48% stating that they would ‘wait and see’. That’s not to say that there isn’t momentum: the majority of attendees indicated they have some form of plan to invest in this nascent market in the near future, with nearly one in four indicating they would look to do so in the next 12 months.

Before the webinar concluded, panellists had an opportunity to offer their thoughts on the future of digital assets. Acquilla said that he is keen to see how blockchain technology can be used to eliminate information asymmetries. “We live in a world where really there should be close to perfect information. Yet every day we are confronted with transactions where this information is imperfect.

“For example, when buying a car, you can't really trust the owner on a number of basic aspects – when was it last serviced, has it ever been in an accident, are all the components original.” If, however, you could represent a car in a token form, this information could become immutable fact. So, he concludes, being able to make these kind of transactions without intermediaries and with minimal friction, is the future he is excited for.