EFAMA publishes Buyside Practitioner’s Guide to Tokenisation
EFAMA has published a “Buy-side Practitioner’s Guide to Tokenisation”. The report includes an overview of how tokenisation is shaking up the asset management industry, the global context as other jurisdictions move to enable digitalisation, and a ‘’how-to’’ for those fund managers still at the start of their tokenisation journey.
A number of European jurisdictions have emerged as hubs for DLT assets, powered by national legal frameworks on custody and transfer of digital securities, as well as the broader European framework on non-traditional crypto-assets (MiCA) and trading and settlement (DLT Pilot Regime). The level of activity among firms shows how important a digital strategy is for adapting to the future tokenised economy. At the same time, there are concerns that Europe’s early lead could be squandered if regulation does not keep pace with market developments.
Specifically, the EFAMA guide calls for:
An immediate increase to threshold limits imposed by the DLT Pilot Regime to increase available liquidity on DLT platforms and enhance trading volumes in the secondary market.
Regulatory convergence between divergent national rules on digital assets across Member States. Stronger convergence would prevent regulatory arbitrage and help promote scale in DLT-based investment funds.
Convergence between the regulatory frameworks for traditional assets (MiFID, AIFMD, EMIR, CSDR) and digital assets (DLT Pilot Regime, MiCA). As DeFi grows, there should be no distinction between the traditional ecosystem and the DLT-based ecosystem, but rather a single, integrated financial ecosystem.
A clear level playing field for cash-on-chain solutions. A competitive landscape including a digital Euro, MiCA-regulated stablecoins and CBMTs (commercial bank money tokens) is the optimal outcome signaling that Europe is open to innovation and market-led forces.
Regulatory clarification to support the uptake of tokenised money market funds (t-MMFs) as collateral in derivatives margining and repurchase transactions. As an early front-runner of a viable use-case, every effort should be made by regulators, central banks, and the industry to ensure that t-MMFs are utilised to their full potential.
Tanguy van de Werve, Director General, EFAMA said, “This timely report, offers a critical and much-needed perspective from the European buy-side on the opportunities presented by distributed ledger technology (DLT). It also emphasises the importance and urgency of developing a long-term strategy for tokenisation at both the individual firm level and within the broader financial ecosystem.”
Christoph Hock, Chair of the EFAMA Tokenisation Task Force and Head of Tokenisation & Digital Assets at Union Investment, said, “Tokenisation of assets and cash empowers the asset management industry to provide best-in-class services to its clients within a DLT-driven financial ecosystem.”
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Notes to Editors
For further information, please contact:
Hayley McEwen
Head of communications and membership development
