Bumper week of digital assets reports sees central banks, BIS, IMF—and yours truly—weighing in

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2 October 2021
Monica Summerville

It seems that nowhere is the acceleration of tech-driven change more evident across the financial services ecosystem then the impact of digital assets. As recent Celent research reports have found, traditional financial institutions (FIs) across the capital markets ecosystem are moving from a learning to doing phase of activity.

In support of these efforts, following “State of Play: Capital Markets & Crypto”, Celent’s capital markets research team has now published “Building Out Digital Asset Servicers in Capital Markets: Questions to Ask and Answer, Now “ which provides actionable insight and advice on best practice and questions for FIs when considering the costs of developing new risk/compliance framework and infrastructure to support potential new business activities around digital assets.Celent is also following developments around digital assets across the wider financial services ecosystem.

Seems that our timing could not have been better, as last week also saw three major digital asset themed reports released:

Data from the IMF may help illustrate why this is an area that is of increasing interest to traditional financial institutions across the capital markets ecosystem. While central banks and regulatory authorities are largely focused on central bank digital currencies (CBDCs), cross border payments and potential impacts on the stability of banking sector, Chapter 2 of the IMF report above found that in 2021:

  • Market capitalisation of crypto assets increased dramatically (exceeding $2 trillion) and expanded beyond Bitcoin
  • There was a quadrupling of market cap of stablecoins in 2021
  • Risk-adjusted returns of non-stablecoin crypto assets are comparable to other mainstream benchmarks

2021 also saw the rapid rise of:

    • Trading volumes on exchange of Bitcoin, Ether and stablecoins
    • Locked” in collateral in Decentralized Finance (DeFI)

Source: IMF “The Crypto Ecosystem and Financial Stability Challenges, Oct 1, 2021

Celent has been watching this space for some time, both in terms of understanding the underlying technologies as well as market structure and solutions landscape developments and it’s a topic we enjoy speaking about.Please reach out if you can help and we invite FI readers attending Sibos to join a think tank session we are hosting on “The Rise of The Internet of Value: Roles and Opportunities of Cryptocurrencies, Stablecoins, and CBDCs in financial Services”, (registered Sibos attendees click here to register for this session:

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