The Future of Securities Settlement is Here – Money Meets Securities on Blockchain
November 26th, 2020
As the emergence of new economies on blockchains using Distributed-Ledger-Technology (“DLT”) and smart Contracts promises to bring change to various industries, not least the financial sector. This is especially true for Capital Markets. While some processes are already digital and efficient (e.g. investor trading experience), many processes are not. First and foremost, many securities are still analogue products and issuances are handled by large investment banks. This slows down the time to issuance of securities for issuers. Secondly, post trade processes are slow and inefficient. The standard time for securities settlement is T+2, while exposing sellers to principal risk and the need to reconcile the transactions through siloed systems of all participants. Thirdly, the value-chain of securities is highly fragmented and many different parties participate in all pre- and post-trade processes, making processes complex and expensive.
The solution: Tokens for securities settlement
The Bank of international Settlements stated in a report published early of 2020, “Tokens may be the future of securities settlement”. Tokenization, the digital representation of securities and money, in the form of a digital token is incrementally changing that.
Cashlink Technologies and Monerium have partnered to empower participants in the financial industry to benefit from token based securities and money and let them benefit from an end-to-end solution which increases efficiencies, saves costs, automates actions and decreases settlement risks. This leads to the possibility of token based securities settlement today!
- Cashlink provides players in the financial industry with an end-to-end software based tokenization solution
- Monerium bridges the traditional banks and blockchains so businesses can move their money seamlessly between the two without going through exchanges.
- The partnership between Cashlink Technologies and Monerium empowers players in the financial industry to gain competitive advantages through early positioning on capital markets 2.0
By opening the way for traditional financial institutions to use money on-chain and tokenize their assets without requiring a high level of technological resources. Clients benefit from an easy to plug complexity reduced solution that covers the complete process.
The missing piece – Money on chain
Tokenized securities offer already countless advantages but for realizing the full potential of it compliant money on-chain is required. Up to now, this potential could only be unlocked while using cryptocurrencies or somewhat trustworthy stable-coins. As an Electronic Money Institute, Monerium can issue Euro-backed tokens that are categorized as E-Money. This is a huge difference as institutional players can hold those Euro-tokens while being assured that they can claim their E-Money token for real Euro.
With money and securities on the same ledger, Smart Contracts can conduct real-time delivery-vs-payment with automated actions, leading to clearing- and settlement as well as corporate actions handled completely by the technology itself.
Main advantages of using tokenization
By mapping securities on the blockchain, many expensive intermediate parties become unnecessary. Thus, the costs over the lifecycle of a security can be reduced by 65% when compared to traditional securities. Find out more about cost advantages in a recently published pricing report [here].
At Monerium, we help customers move euros, dollars and sterling between bank accounts and their blockchain addresses. We are an Electronic Money Institution (EMI) licenced to operate in the whole EEA and UK. Our team has experience which ranges from central banking to global web services. We believe that all assets will be tokenized and transacted online, that is why we became the first company authorized to issue electronic money (e-money) to blockchains.
Cashlink is one of the leading software companies for tokenization services, providing all tools, services and licenses for a Blockchain-based Capital Market 2.0. The Cashlink end-to-end software-as-a-service solution offers players in the financial industry all the building blocks, services and licenses they need to issue-, settle and trade tokenized securities.
Through Cashlinks engagement as founding members of the International Token Standardization Association (“ITSA”), the European forum “International Association for Trusted Blockchain Applications” (INATBA) as well as the Hesse regional group of the national German Blockchain association, Cashlink actively promotes and shapes the futures of Blockchain powered Capital Markets.
Cashlink receives support from renowned investors such as the listed VC Finlab AG and the Maschmeyer Group and is winner of the Fintech Germany Award 2020 in the category blockchain.