Is tokenization revolutionary or evolutionary? How will it impact asset classes differently? Could it exacerbate liquidity fragmentation? Who will benefit more from the technology — institutions or retail traders? Are vertically-integrated trading venues a path to efficiency or a peril?
To get answers to the most pressing tokenization questions in finance today, we sought a diversity of perspectives from senior experts in both crypto and traditional finance at firms including Bloomberg, Flow Traders, and EDX Markets.
Our tokenization roundtable discussion features five participants:
- Michael Lie, Global Head of Digital Assets at European market maker Flow Traders
- Dushyant Shahrawat, Senior Analyst, Crypto and Digital Assets Market Structure at leading market-data provider Bloomberg
- Joe Lau, President & Co-Founder of blockchain development platform Alchemy
- Chris Soriano, Co-Founder & CCO at institutional crypto middleware platform BridgePort
- Dave Olsson, CCO at crypto exchange EDX Markets
Tokenization champions have touted vertically-integrated exchanges that issue, trade, clear and settle securities on a single platform as the way forward. But skeptics have warned vertical integration concentrates risk in a single entity. Is vertical integration a noble aim or a misguided one?
EDX Markets CCO Dave Olsson
How vertically integrated should your crypto provider be? This has been a subject of debate since the early days of Bitcoin.
Now, vertical integration has become a prominent theme in conversations around tokenization, as distributed ledger technology makes it technically feasible to combine issuance, trading, clearing and settlement on a single platform. Proponents often argue that consolidating these functions could streamline workflows and accelerate settlement. Those goals are important, and the industry should continue exploring how technology can modernize post-trade processes and reduce friction in capital markets.
That being said, capital markets have evolved over decades with a deliberate separation of critical roles, such as brokering, matching orders(execution), clearing and custody. Those clear guardrails are not accidental. They were developed to promote resiliency, transparency and risk management by ensuring that no single entity controls the entire transaction lifecycle.
At EDX, we believe the future of digital-asset markets will likely reflect a hybrid model. Technology can streamline workflows and improve efficiency, but the broader market structure should continue to emphasize the distinct responsibilities of brokers, venues and custodians.
Our own approach since day one has focused on building institutional-grade market infrastructure that mirrors many of the best practices present in traditional markets, including distinct roles for trading venues, clearing and settlement providers. As the digital-asset market continues to mature, maintaining that balance between innovation and market integrity will be essential to supporting institutional adoption and long-term stability.
Read the full article here.