Digital Assets Begin to Bloom10.01.2018
Markets Media recently caught up with Igor Telyatnikov, co-founder and president of AlphaPoint, to discuss the evolution of digital assets.
How would you describe the financial services industry’s appetite for developing digital assets?
The financial services industry has publicly and privately been investing hundreds of millions of dollars into blockchain as a transformative technology for their businesses. Many major players are exploring developing digital assets as well as providing the platform for investors to trade them and other digital assets. From where AlphaPoint sits, we were very excited to help big institutions like CME, who partnered with the Royal Mint, to digitize gold as well as the private equity real estate firm Muirfield, as they tokenize a real estate portfolio. XP, the largest issuer of debt in Brazil, recently announced their plans for a crypto exchange XDEX and we are proud to be a part of this exciting project.
The idea of democratizing access to investments is not new; however, blockchain technology has opened the door for more opportunities and there is certainly a lot more that we can expect to see in the years (and decades) to come in digital assets.
Additionally, we can expect to see the formation of new financial products based off of digital assets. Indexes that benchmark their performance and technology – like AlphaPoint’s Smart Basket technology – that enables firms to create investable products based off of AlphaPoint Indexes.
How significantly has the US Securities and Exchange Commission’s opinion regarding the definition of a securities token hampered the development of digital assets?
Have their definitions actually hampered the development? Would further clarity from SEC provide a larger window of opportunity – or, rather, a safe haven, since we have graduated from the perspective of crypto as the “wild west”?
From AlphaPoint’s seat, we are focused on ensuring that we set our customers up for success in whatever region and regulatory domain they seek to operate in. We offer compliant and secure solutions designed by a team of experienced capital markets and developers who know what is required to adhere to the complexities of these markets.
Our customer base is global, in over 35 countries, so we are regularly engaging with regulators directly and indirectly. Receiving clearer guidelines will help the industry grow by providing regulatory clarity and enable larger financial institutions to enter the space in a bigger way.
Where are you finding the most mature use of digital assets and exactly how mature do you consider the market and its products?
Digital assets are not just cryptocurrencies. Images, documents, and video are digital assets. Domain names are digital assets and we have seen that market mature since the mid-80s. Who would’ve guessed when the first domain names were registered back in 1985, that 25 years later, a domain would sell for nearly $50 million?
Zooming in on crypto as digital assets, institutions, family offices, and retail investors are trading digital assets on a regular basis. The first Bitcoin was mined in 2009 so we are not even a decade into cryptocurrencies; however, it is clear that we are still in an upswing of adoption, creation, and different uses of digital assets.
Recent research from Satis Group predicted that crypto trading volume will grow by over 50% in 2019 – overtaking the trading volume of corporate debt next year! There are actual vendors that accept payment in digital assets – with Overstock.com, Subway, and Expedia as examples of companies that accept payment via Bitcoin. A CryptoKitty going $170,000 doesn’t necessarily indicate that digital assets have matured, but it certainly indicates that there is value placed on a variety of digital assets.
Who do you see developing and adopting digital assets the quickest? Is it financial services or other fields such as art, entertainment, or real estate? Where do you see the biggest opportunity regarding digital assets?
Although there are many use cases outside of financial services, the adoption is primarily being fueled by financial services as well as the technology companies that provide the infrastructure for all sectors to adopt digital assets.
We enable institutions to launch, scale and operate digital asset networks all over the world – and, as a part of our vision, we have also created the technology for the creation of digital assets as well as the creation of other investable products based off of digital assets.
A massive opportunity exists across all major asset classes – from commodities like gold to exclusive goods like art. Illiquid assets account for over $11 trillion of investment opportunity. AlphaPoint believes that Blockchain is a key enabler of wealth creation and we foresee explosive growth in bringing historically-illiquid assets to market through tokenization.
So the opportunity for art, entertainment, and/or real estate is already being seized and we will continue to see development of and adoption of digital assets from industries outside of financial services.
Where have you seen the greatest hotbed of digital asset development? Has it been from the listed desks, such as equities, options, and exchange-traded funds, or more from the over-the-counter markets?
We believe digital assets are a supplemental opportunity to traditional securities (not a replacement) and therefore the opportunity in traditionally illiquid markets (private shares, commodities, luxury goods, real estate, etc.) are where institutional players are looking to drive new revenue opportunities.
This is and will continue to be a collaboration between the institutional side and the technology side of the equation. Institutions must rely on technology providers to build safe and secure solutions. AlphaPoint’s deep bench of capital markets executives and technology professionals makes our offering one built on a knowledge base and secure system to satisfy the cautious entrant.
AI-driven handlers autoprocess unstructured data, eliminating the need to manually enter deal data.
The bank will integrate Taurus' technology to establish digital asset custody and tokenization services.
BondWise was developed with bondIT, a fintech that uses data science, advanced AI and machine learning.
Engine is a specialist fintech accelerator and innovation hub for investment management.
Standing settlement instructions have long been a major cause of failed trades.