Originally posted on cashlink.de
The emergence of new economies on blockchains using Distributed-Ledger-Technology (“DLT”) and Smart Contracts promises to bring change to various industries, not least the financial sector. This is especially true for Capital Markets. While some processes are already digital and efficient (e.g. investor trading experience), many processes are not. First and foremost, many securities are still analogue products and issuances are handled by large investment banks. This slows down the time to issuance of securities for issuers. Secondly, post trade processes are slow and inefficient. The standard time for securities settlement is T+2, while exposing sellers to principal risk and the need to reconcile the transactions through siloed systems of all participants. Thirdly, the value-chain of securities is highly fragmented and many different parties participate in all pre- and post-trade processes, making processes complex and expensive.
The Bank of International Settlements stated in a report published early of 2020, “Tokens may be the future of securities settlement”. Tokenization, the digital representation of securities and money, in the form of a digital token is incrementally changing that.
Cashlink Technologies and Monerium have partnered to empower participants in the financial industry to benefit from token based securities and money and let them benefit from an end-to-end solution which increases efficiencies, saves costs, automates actions and decreases settlement risks. This leads to the possibility of token based securities settlement today!
By opening the way for traditional financial institutions to use money on-chain and tokenize their assets without requiring a high level of technological resources. Clients benefit from an easy to plug complexity reduced solution that covers the complete process.
Tokenized securities offer already countless advantages but for realizing the full potential of it compliant money on-chain is required. Up to now, this potential could only be unlocked while using cryptocurrencies or somewhat trustworthy stable-coins. As an Electronic Money Institute, Monerium can issue Euro-backed tokens that are categorized as E-Money. This is a huge difference as institutional players can hold those Euro-tokens while being assured that they can claim their E-Money token for real Euro.
With money and securities on the same ledger, Smart Contracts can conduct real-time delivery-vs-payment with automated actions, leading to clearing- and settlement as well as corporate actions handled completely by the technology itself.
By mapping securities on the blockchain, many expensive intermediate parties become unnecessary. Thus, the costs over the lifecycle of a security can be reduced by 65% when compared to traditional securities. Find out more about cost advantages in a recently published pricing report.
Using DLT and Smart Contracts for tokenization, leads to the digitization of often still paper-based processes. The speed of transactions increases considerably through the use of tokenized securities. Through tokenizing securities, ownership records and transaction histories are held on a distributed ledger that is accessible by all market participants and thus dramatically reduces the need for reconciliation, trade confirmations and other actions conducted in the back offices of market participants.
The digitization of securities drastically simplifies the transfer of assets. Assets that were previously illiquid can easily and securely be transferred worldwide 24/7.
Transactions are stored unchangeably and transparently on a distributed-ledger. They are therefore securely traceable at any time. This strengthens the trust between participants in the market and leads to many efficiencies as the distributed ledger clarifies ownership and thus simplifies many processes like compliance, shareholder voting, distribution and other corporate actions.
Cashlink is one of the leading software companies for tokenization services, providing all tools, services and licenses for a Blockchain-based Capital Market 2.0. The Cashlink end-to-end software-as-a-service solution offers players in the financial industry all the building blocks, services and licenses they need to issue-, settle and trade tokenized securities.
Through Cashlinks engagement as founding members of the International Token Standardization Association (“ITSA”), the European forum “International Association for Trusted Blockchain Applications” (INATBA) as well as the Hesse regional group of the national German Blockchain association, Cashlink actively promotes and shapes the futures of Blockchain powered Capital Markets.
Cashlink receives support from renowned investors such as the listed VC Finlab AG and the Maschmeyer Group and is winner of the Fintech Germany Award 2020 in the category blockchain.
For more information on Cashlink visit cashlink.de