Digital assets: challenges and outlook for the financial sector's most disruptive phenomenon


OP-ED by Aurora Cuadros, Corporate Director of the Operational Services Division, Cecabank.

Digital assets, which are essentially digital representations of property with potential monetary value, have burst into our lives with such force that they have embedded concepts such as cryptocurrencies into our vocabularies and collective imagination, to the point where they appear to be part of the financial landscape when in fact their invention dates back a mere ten years; and in certain scenarios, such as with utility tokens, the financial approach should take a back seat to operational or use case approaches.

Although this swift adoption has led to considerable unfamiliarity with these types of assets, and also a sometimes justified scepticism towards them, there is no doubt that this is not a passing fad, but rather a potential new asset class which, especially thanks to blockchain technology, also has enormous disruptive potential.

To date, investment volumes in digital currencies, talk that we are heading towards a tokenisation of the economy, or conversations around a hypothetical 'digital euro', illustrate well the effervescent and rapidly evolving momentum of these digital assets. This development does not prevent the world of cryptocurrencies and tokens from facing significant challenges and calls for a cautious approach by regulators, financial players and individuals who are constantly bombarded about the virtues and risks of some of the most popular digital assets such as Bitcoin, Ethereum or NFTs.

The first such challenge is of course regulatory. We should not overlook the fact that there is still no specific regulation governing these digital assets as a whole in Europe, which is why it is important to pay attention to the drafting and roll-out of the MICA (Markets in Crypto Assets) regulation, which will be the first attempt to regulate the cryptoassets market and the platforms that operate with them on a European scale.

The regulatory challenge is directly related to that which derives from the very composition and current nature of the universe of digital assets. Pending clear rules of the game, the digital asset market today is characterised by the absence of benchmark operators, its high dispersion and variability, and this exposes those who participate in it to considerable risk.

In this context, Cecabank is tackling digital assets in a similar way to how we tackled traditional assets since our incorporation as a wholesale credit institution: rigorously, exhaustively and always trying to move forward on firm ground. Today, our role is primarily to help financial institutions, insurance companies and institutional operators to start embracing this new digital market.

To this end, we are formalising strategic alliances with prestigious stakeholders by identifying and building relevant relationships with the best players in an industry that is constantly adapting. At the same time, we are also training our teams and developing in-house capabilities in digital assets, so that this ongoing training will enable us to be ready to capitalise on all the opportunities that this new range of assets will undoubtedly bring to our clients in the short, medium and long term.

In short, at a time when digital assets are showing great disruptive potential but are still subject to considerable uncertainty and scrutiny by financial players, Cecabank has established a roadmap in order to act as a compass and trusted advisor on all matters related to digital assets.

And, precisely to continue advancing on this roadmap and learning curve, innovation in post-trading will be the focus of the 8th Securities Services Conference 'Post-trading opportunities in a sustainable and digital context', which Cecabank will be organising on Tuesday 24 February in collaboration with Funds People, El Español and Invertia. You can access the conference at the following link.