SDX says SMEs are the key to the growth of digital asset markets

Decoupling Blockchain Technology from Cryptocurrency Markets: The Rise of Tokenized Securities

Blockchain technology has successfully decoupled itself from the volatile cryptocurrency markets and has established an independent existence. While the cryptocurrency markets have experienced significant fluctuations and setbacks, the technology behind tokenizing securities has continued to gain traction and evolve. This article explores the decoupling of blockchain technology from cryptocurrency markets and the rise of tokenized securities as a separate and promising asset class.

Understanding the Parallels between Derivatives and Digital Securities

Massimo Buti, Head of Equity at SDX, highlights the parallels between derivatives and digital securities. Both asset classes have been at the forefront of financial innovation and require continuous development and adaptation. The focus on efficiency and improving operations, risk management, and margins in derivatives markets can be applied to the development of liquidity and efficiency in digital securities. Lessons learned from the derivatives markets, such as liquidity spectrum and risk compression, can guide market practitioners in structuring and developing liquidity in digital securities.

The Role of Traditional Exchanges in the Digital Asset Space

Traditional exchanges, such as SDX, play a crucial role in the transformation of the securities market. With the decline of IPOs and the rise of private equity, traditional exchanges need to restructure their proposition to cater to privately managed companies. The infrastructure and services provided by exchanges can support the funding journey of companies, provide liquidity when needed, and facilitate secondary market trading. By leveraging blockchain technology and digitizing assets, traditional exchanges can offer more efficient and accessible services to private markets.

The Importance of Convergence between Traditional and Defi Markets

The convergence between traditional finance and decentralized finance (Defi) is a key aspect of the future of digital assets. While Defi operates in a decentralized manner, traditional exchanges can provide the expertise, familiarity, and regulated environment needed to bridge the gap between the two worlds. The adoption of blockchain technology and DLT-based protocols can enhance the efficiency and transparency of Defi, while traditional exchanges can offer centralized functions and trusted infrastructure. This convergence will shape the future of digital assets and create a more interconnected network.

Building an Ecosystem for Private Capital Raise

Private markets are underserved when it comes to infrastructure and support for capital raising. SDX aims to fill this gap by providing an ecosystem for private capital raise, supporting companies from pre-seed to maturity. By leveraging blockchain technology, companies can issue digital securities, automate processes, and improve communication with investors. The digitization of share registries and corporate actions streamlines operations and enhances transparency. SDX’s partnerships with fintech companies, such as Dara and Equitec, further strengthen the ecosystem and provide additional services for issuers and investors.

The Vision for the Future: Networked Industry and Synergies

The future of digital assets and traditional finance lies in a networked industry. While SDX operates as an independent entity within the larger group, there are synergies and collaborations with other divisions and partners. The vision is to create a network where different nodes, including traditional exchanges, share registries, and banks, work together to provide seamless services. SDX aims to lead and shape this network, leveraging its expertise and infrastructure to drive the convergence of traditional and digital markets.

Finding Issuers and Investors in the Digital Asset Market

SDX relies on partnerships and collaborations to find issuers and investors in the digital asset market. By working with introducing brokers, corporate advisors, and fintech companies, SDX can access deal flow and expand its reach. While the focus is on privately managed companies, SDX also recognizes the importance of asset servicing and secondary market liquidity. Issuers and investors have varying preferences when it comes to secondary market liquidity, with some valuing control and others seeing it as a benefit. SDX aims to provide a range of services that cater to different needs and preferences.

Decoupling Blockchain Technology from Cryptocurrency Markets: FAQs

Q: Has blockchain technology successfully decoupled itself from cryptocurrency markets?

A: Yes, blockchain technology has decoupled itself from cryptocurrency markets and is now recognized as a separate and promising asset class.

Q: How important is asset servicing and secondary market liquidity to issuers and investors?

A: Asset servicing and secondary market liquidity are becoming increasingly important to issuers and investors. Issuers value efficient and cost-effective asset maintenance, while investors appreciate the ability to sell their holdings and receive dividends on time.

Q: Are there concrete synergies between SDX and other divisions within the group?

A: While SDX operates as an independent entity, there are synergies and collaborations with other divisions within the group. The group’s expertise and infrastructure can be leveraged to enhance SDX’s services and drive the convergence of traditional and digital markets.

Q: How does SDX find issuers and investors in the digital asset market?

A: SDX relies on partnerships with introducing brokers, corporate advisors, and fintech companies to access deal flow and expand its reach. The focus is on privately managed companies, and SDX aims to provide a range of services that cater to their needs and preferences.

Q: What is the future vision for SDX and the digital asset market?

A: The future vision for SDX is to be part of a networked industry where different nodes collaborate to provide seamless services. SDX aims to lead and shape this network, leveraging its expertise and infrastructure to drive the convergence of traditional and digital markets.