(l-r) Giulia Pescatore, senior manager at Deloitte Luxembourg, Pierre Mottion, head of DLT and strategy at Clearstream, Amparo Garcia Flores, general director Europe at Securitize, John Ehlers, chief operating officer at Swissquote Bank Europe, and Eron Angjele, senior expert digital assets at Caceis, discussed the various facets, challenges and emergence of the digital assets market during the second edition of the Digital Assets Conference, organised by Deloitte, 12 March 2024. Photo: Deloitte Luxembourg

(l-r) Giulia Pescatore, senior manager at Deloitte Luxembourg, Pierre Mottion, head of DLT and strategy at Clearstream, Amparo Garcia Flores, general director Europe at Securitize, John Ehlers, chief operating officer at Swissquote Bank Europe, and Eron Angjele, senior expert digital assets at Caceis, discussed the various facets, challenges and emergence of the digital assets market during the second edition of the Digital Assets Conference, organised by Deloitte, 12 March 2024. Photo: Deloitte Luxembourg

Industry leaders and experts in digital assets, DLT and tokenisation stressed the importance of enhanced transparency, regulatory uniformity and platform interoperability, along with a strong ‘network effect,’ as key to broadening the digital assets market’s adoption and realising its full potential, during the Digital Assets Conference.

The digital assets market has a positive outlook for 2024, with more institutional investors being drawn into the market and clearer regulations, Luxembourg professionals have stated at an industry summit.

In its second edition, Deloitte brought together digital assets experts to discuss the evolution and tangents of the digital assets market at the Digital Assets Conference on Tuesday 12 March. The experts discussed digital assets implementation, impact on strategies, tokenisation platforms and fragmented regulatory landscape, amongst others.

Moderated by Giulia Pescatore, senior manager at Deloitte Luxembourg, the discussion kicked off with the general agreement that following a difficult year 2023, which saw cryptoasset platforms go bust and/or face legal challenges, 2024 is shaping up to be more positive towards the crypto market, with institutional investors driving growth. Eron Angjele, senior expert in digital assets at Caceis, remarked that in previous years, most of the activities around cryptoassets, a subset of the digital assets market, used to be active during the weekends, mostly driven by enthusiasts and tech professionals. However, he noted a substantial shift in the activity during the weekdays, which is driven by institutional investors and financial professionals, giving him the sense that the market is maturing. He emphasised that digital assets, which have roots in cryptoassets, are now more mainstream and regulated, giving more confidence in the digital assets market.

Welcome regulation

John Ehlers, chief operating officer at Swissquote Bank Europe, added that with the European Union’s markets in crypto-assets regulation (Mica), which aims to protect investors and preserve financial stability while fostering innovation in the cryptoassets sector, market players are better informed and better organised in their operations.

Amparo Garcia Flores, general director Europe at Securitize, concurred and stated that regulation brings more investors and issuers of digital assets to the market as they are more comfortable with regulated products. Pierre Mottion, head of DLT and strategy at Clearstream, highlighted that confidence in the crypto-ecosystem is key for broader acceptance. He added that risk assessments and compliance should further help the digital assets market to grow. Taking note of the distributed ledger technology (DLT)--a digital system for recording the transaction of assets in decentralised databases, such as blockchain--experts agreed that it brings higher accessibility, transparency and lower operational costs for issuers, traders and digital assets servicing platforms and intermediaries, benefitting the whole ecosystem.

However, multiple jurisdictions and asset-class specific regulations are fragmenting the digital assets market, experts raised the concern. ‘Regulatory standardisation’ would bring level playing as well as more players, including investors and issuers, noted the panel.

Tokenisation could be transformational

One of the key aspects of digital assets being tokenisation--the process of converting rights to an asset into a digital token on a blockchain or DLT platform--was explained by Thibault Chollet, partner at Deloitte Luxembourg, during his keynote address. When applied to real assets, it could help make smaller rights for high-value assets. This, he elaborated, is transformational as it not only diversifies risk for issuers but also increases trading and liquidity. Moreover, tokenisation is set to move the high-value-low-volume markets to low-value-high-volume segments, which could liberalise markets for smaller and retail investors.

Concluding the conference, the experts agreed on the need for a ‘network effect’--a phenomenon where a product or service gains additional value as more people use it--as a crucial aspect for the digital assets market to gain its full potential. Mottion argued that this means all the players in the digital assets spectrum, including buyers, sellers and issuers of digital assets, need to move in unison, helping asset managers and distributors with a positive-feedback loop.

Flores added that the interoperability between platforms and uniform regulatory standards are the requirements that would help bring scalability and thus the much anticipated rewards for all players.

The conference was attended by over 100 professionals.

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