We announce today that INDUSTRIA had joined Global Digital Finance (GDF), the industry membership association that promotes the adoption of best practices for cryptoassets and digital finance technologies. INDUSTRIA is working with various present and future players in the cryptoasset sector like investment banks, token issuers, and platform service providers and we need to ensure them that our company follows the industry standards, best practices, and sound governance policies.
Personally, I’m very happy and enthusiastic to be part of GDF. It is an addition to my commitment for working groups like ISO/TC 307 Blockchain and distributed ledger technologies and within the All-Party Parliamentary Group on Blockchain.
About Global Digital Finance
The Cryptoassets and Distributed Ledger Technology (DLT) looks to disrupt the industry by replacing intermediaries and create immutable records. In such dynamics, Global Digital Finance was initiated by Lawrence Wintermeyer, Simon Taylor and Jeff Bandman and represents an open and self-regulated industry body driving the acceleration and adoption of digital finance to support the next era of digital commerce, dedicated to the advancement of next-generation technologies in finance for society. To INDUSTRIA GDF represents an industry-led way to set and manage rules in an unclear regulatory space surrounding the cryptoasset market and we like the idea to be part of it.
Tackling Urgent Challenges
The most urgent industry challenges GDF is facing at the moment are:
Understanding in new and existing markets of what tokens are and how public blockchains and distributed technology platforms operate.
Offering better protection to vulnerable investors while providing better routes to capital for entrepreneurs.
Supporting financial stability and market integrity in increased exposure of market participants.
Adoption of a common approach in Anti Money Laundering and Counter-Terrorism Financing.
GDF Cryptoasset Taxonomy
In 2018 GDF gathered a group of professionals from across financial services, law and cryptoassets industry practitioners from London, New York, and Hong Kong to create the cryptographic asset taxonomy document. The intentions for this document were to represent a consistent and reliable taxonomy of these new tokens, their life-cycle, and the market actors who engage with them. Using this taxonomy as a starting point, the document then outlines key risks for consideration and highlights the intersection of these risks with existing policy frameworks across several jurisdictions. In doing so the document endeavour to provide all market participants, and particular policy makers, with the tools necessary to consider the governance frameworks and codes of conduct that are best suited to mitigate the risks associated with a given token.
Why Cryptoassets Are Important?
At INDUSTRIA we believe that to finance cryptoassets represent a technology revolution as significant as the Internet was to communications. Broadly speaking cryptoassets (not just cryptocurrencies) are cryptographic techniques, used to regulate the generation of units of the asset and to verify their transfer between parties via a blockchain or a DLT (distributed ledger technology) platform without a central party. As a rule different cryptoassets possess different behaviour and use.
In 2009 there was only one cryptoasset in the market — the cryptocurrency bitcoin. At the moment there are thousands of different cryptoassets white more and more are created on a daily basis. Such exponential growth creates many new challenges. With the market increasingly maturing we need better ways to understand cryptoassets, their issuing, and transfer. GDF taxonomy contains the following three top-level label categories, which are not necessarily mutually exclusive:
Payment Tokens: Tokens whose intrinsic features are designed to serve as a general purpose store of value, medium of exchange, and/or unit of account.
Financial Asset Tokens: Tokens whose intrinsic features are designed to serve as or represent financial assets such as financial instruments and “securities”.
Consumer Tokens: Tokens that are inherently consumptive in nature, because their intrinsic features are designed to serve as, or provide access to, a particular set of goods, services or content.
The usage of the cryptoassets comes with several advantages (as opposed to the existing financial systems).
They can increase transparency: The technical underpinnings of cryptoassets enable the deployment of marketplaces for the exchange tokens that are significantly more transparent than existing financial systems. As such, there is the opportunity for significant reductions in the prevalence of fraud, money laundering, terrorist financing, and other undesirable or illegal activities within both newly created cryptoassets and existing physical/digital tokens migrated to a cryptoassets form.
They can be deployed and operated simply and at low cost: Cryptoassets have the potential to significantly increase the operational efficiency of developing and operating token networks and associated marketplaces for those tokens. This lowers the barriers to creating efficient marketplaces for products that are not currently tokenised (e.g. asset classes such as real estate, insurance policies, wine, and diamonds) facilitating increased liquidity, and lower costs price discovery, and less fragmented markets for these products.
They enable experimentation: Recent deployments of cryptoassets have sought to establish new business models predicated on previously unimagined categories of tokens such as P2P markets for electricity or decentralised computing, in which consumers can rent-out their unused computing resources securely to other internet users, and get paid automatically and transparently via cryptoassets.
GDF Code of Conduct
A code of conduct is a starting point for industry to have a shared rulebook. Typically the industry has a nuanced understanding of its market dynamics and can forge principles likely to be adopted and to be effective. The cryptoasset industry is global and therefore a global industry framework is needed since there can’t be at this stage clear regulatory authority, that operates globally.
Why a Code of Conduct is Important?
Cryptoassets have potential. But for them to realize this potential, institutionalisation is needed. Institutionalisation is the at-scale participation in the crypto market of banks, broker-dealers, exchanges, payment providers, fintech providers, governments and other entities in the global financial services ecosystem. We believe this is a necessary next step for crypto to create trust and scale. With the Code of Conduct Global Digital Finance will drive efficient, fair and transparent crypto asset markets by building a knowledge base and best practice for ‘Truly Digital’ finance and the benefits tokens can bring to all market participants.
Benefits from INDUSTRIA Joining the GDF
We are very enthusiastic about our membership in GDF. From our perspective the regulatory and governance issues that the blockchain and fintech industries face today are fast-changing and we’re happy to join an organisation that shares our long-term views and provides open access to all resources produced by its community. Why do we believe this is important:
To ease the process of adopting advanced technology. Following common industry standards and best practices, combined with superior distributed ledger technology like Corda will improve our ability to support our clients in rapidly deploying networks of tokens at low cost represents. This is a massive opportunity for the financial services ecosystem and broader society and a lot more business for INDUSTRIA. By creating new asset classes we will enable new business models and improve the liquidity and transparency of both new and existing markets.
The industry sees now migration from being retail investor led to institutional trading desks and institutional grade trading venues. We need better tools to protect investors with the new challenges of the day. Regulators and governments are concerned with the potential for money laundering and terrorist financing, the term ‘blockchain’ is broadly used with a negative connotation because of the nature of some of the ICO (initial coin offerings) and there is a lot of room for reputational improvement.
To support entrepreneurs and identify new routes to capital for them. The new capital raise (called Securities Token Offering or STO) is a way to attract global investment using the same underlying tech many used for the ICOs but in a more compliant manner. Attracting a global investor means companies and ventures have a broader pool of liquidity and a possibly higher likelihood of receiving investment. The plan is INDUSTRIA to turn into a strategic blockchain technology partner, providing customers with a competitive edge in terms of knowledge and ability to deliver the technical part of an STO launch services.
Last but not least, we would be happy INDUSTRIA to be perceived by partners and clients as a thought leader in the blockchain and the distributed ledger technology field. This is the ultimate advertisement for our business. I would definitely recommend to anyone who has a footprint in the cryptoasset field to join the work of GDF.
See you during the next GDF Summit will on Thursday, 9th May 2019!
Special thanks to Todd McDonald for the insights from his insightful The Emergence of Enterprise Tokens, Asen Doychev for the contribution and Teana Baker-Taylor for her constant efforts as an Executive Director and Board Member of GDF.
INDUSTRIA is a global technology consulting, development and ventures firm with extensive expertise in the field of enterprise blockchain, distributed ledger technology, smart legal contracts, app development, and UX design. Official partner of R3. Let’s talk about making your idea a reality — contact us!