TheImpactofDistributedLedgerTechnologyin

CapitalMarkets

ReadyforAdoption,TimetoAct

BCG

Acrosseachevolutionofglobalcapitalmarkets,trusthasbeenthecornerstoneuponwhichefficientandrobustcapitalmarketsrest.Regulatoryframeworksplayanessentialroleinmaintainingthistrust,settingclear,consistentrulesthatprotectstakeholdersandmeettheobjectivesofpolicymakersworldwide.Efectiveregulationbalancesgrowthandinnovationwithmarketintegrity,consumerprotection,systemicstability,andoverallsafety.

Theemergenceandrapidmaturationofdistributedledgertechnology(“DLT”)anddigitalassetsaredrivingatransformationalshiftincapitalmarkets–demandingproactivecollaborationfrommarketparticipantsandregulatorstoensuretheseassetsandtheirinfrastructurebuildontheexistingprotectionsoftraditionalfinancialinstruments.

Thisreportprovidesacomprehensiveanalysisofthepracticalapplications,opportunities,andchallengesposedbyDLTandtokenizationinglobalcapitalmarkets.Itevaluatestheimplicationsofdigitalsecuritiesacrosstheentiresecuritieslifecycle,oferinginsightsintoat-scaleusecasessuchascollateralmanagement,fixed-incomeissuance,andfundtokenization.Theanalysisfurtheraddressescriticaloperationalrisks,suchascybersecurity,smartcontractreliability,andsettlementfinality,andoutlinesclearriskmitigationstrategies,affirmingthatinstitutional-graderiskmanagementframeworksarebothrobustandadaptabletotheseinnovations.

TheuseofDLTincapitalmarketsmayprovidematerialbenefitssuchassubstantialoperationalefficiencies,reducedsettlementtimes,andincreasedtransparencythroughoutthetradelifecycle.Precisionsettlement,automatedassetservicing,andenhancedregulatoryreportingcapabilitiesarejustafewtangiblebenefitsthattokenizationcanunlock,addressinglongstandinginefficienciesinexistingsecuritiesworklows,makingthesystemsaferandmoresecureforall.

Sincethepublicationofthe2023reporttitledTheImpactofDistributedLedgerTechnologyinCapitalMarkets,institutionaladoptionofDLThasacceleratedsignificantlyacrosstheworld.Keybuildingblocks—robusttechnologyplatforms,evolvingregulatoryclarity,andsustainedinstitutionalengagement—haveconvergedtocreatetheconditionsforrapidexpansionoftokenizedassets.Thecentralquestionisnolongerwhetherreal-worldassetswillbetokenizedatscale,butwhenandhowDLTwillbecomeembeddedinmarketoperations.Signalsfrombothmarketactivityandpolicyframeworksindicatethatastructuralturningpointisnear.

Majorfinancialinstitutionshavemovedbeyondexperimentationtolarge-scaleimplementation,demonstratedbynotablemilestonessuchasJ.P.Morgan’sKinexysdigitalassetnetwork,whichhasprocessedover$1.5trillionintokenizedtransactions.Similarly,prominentbondissuancesonDLTplatforms,includingthosebytheEuropeanInvestmentBank,illustratethegrowingacceptanceandviabilityofdigitalsecurities.Tokenizedmoneymarketfundshavealsowitnessedsubstantialgrowth,relectingincreasinginstitutionaldemandforDLT-basedfinancialinstrumentsthatstreamlineliquiditymanagementandcollateraloptimization.Likewise,theproliferationofregulatedandsoundDLT-basedPaymentInstrumentshasenabledtheseusecasestoscale.Wehighlightthattheseinstitutionshavebeenabletodeploytheseusecasesandsatisfythecontrolsandstandardsrequiredoftraditionalfinancialinstitutions–demonstratingthatitispossibletoensurerisksareappropriatelymanaged,withissuer,market,andinvestorprotectionsinplace.

OuranalysisindicatesthattheselectionofDLTnetworkarchitecturecontinuestobefundamentallydrivenbyspecificuse-caseconsiderations.Networkarchitectureandtechnologicalchoicesvarysignificantlydependingonthebusinessrequirementsandoperationalneedsofeachusecase.Importantly,ourresearchdemonstratesthatinstitutional-gradecontrolsandrobustriskmanagementframeworkscanbeefectivelyimplementedacrossdiversenetworktypes—private-permissioned,public-permissioned,andpublic-permissionlessnetworks.Forpublicpermissionlessnetworks,additionalsolutionssuchasLayer2technologiesandasset-specificsmartcontractshavedemonstratedthecapabilitytoprovidemanyofthenecessarycontrols,scalability,andcompliancemechanismsrequiredbyinstitutionalmarketparticipants.Thesesolutionscanhelpmanageprivacy,operationalresilience,andgovernanceconcernswithinapublicblockchainenvironment.

Hence,weadvocateforatechnology-neutralregulatoryapproach.Prudentialandregulatorytreatmentsshouldfocusontheunderlyingfinancialactivitiesandassociatedrisksratherthanonthespecifictechnologybeingutilized.ThisapproachwillenablemarketparticipantstoresponsiblyleverageinnovativeDLTsolutions,ensuringrobustcontrolsandefficientriskmanagementtailoredpreciselytothecomplexity,scope,andscaleofeachdistinctusecase.

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS2

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS3

InstitutionaladoptionofDLTisaccelerating,backedbyclientdemand,measurableefficiencysavings,andgrowinguseasakeyoperationaltoolinhigh-priorityassetclasses.Theimpetusforprogresswillcontinuetobedefinedbyhowefectivelyinstitutions,regulators,andpolicymakerscanworktogethertosolveopenchallengesaroundlegalcertainty,shareinfrastructure,riskframeworks,andliquidityformationtoscaleinasafeandsoundmanner.Thisreportpresentssixpriorityareasoffocus:legalclarity,interoperability,collaborationtodevelophigh-priorityassetclasses,operationalresilience,enablingstablepaymentforsettlement,andpublic-privatecoordination.Were-emphasizetheimportanceofcoordinationbetweenmarketparticipants,beitbanks,non-bankfinancialinstitutions,ordigitalnatives,prudentialauthorities,andpolicymakers–afragmentedapproachrisksreinforcingtheveryinefficiencieswehopetoovercome.Ultimately,thisreportaimstosupportpolicymakers,regulators,andindustryparticipantsinaligningonpracticalriskmanagementtoolsandsupervisorypracticesthatbalancemarketsafetyandinnovation.

Thestageformassadoptionoftokenizationincapitalmarketsisset,drivenbyclearerregulatorypathways,maturetechnologyplatforms,andcommittedinstitutionalparticipation.NowisthetimeforcoordinatedactiontoharnessthebenefitsofDLT,modernizefinancialinfrastructure,andsupportsustainableeconomicgrowth.

PeterStein

CEO

GlobalFinancialMarkets

Association(GFMA)andAsiaSecuritiesIndustry&FinancialMarketsAssociation(ASIFMA)

ScottO'Malia

CEO

InternationalSwapsand

DerivativesAssociation(ISDA)

SandraRo

CEO

GlobalBlockchainBusinessCouncil

(GBBC)

EliseSoucieWatts

ExecutiveDirector

GlobalDigitalFinance

(GDF)

JackieMesa

COOandSVP,GlobalPolicy

FuturesIndustryAssociation(FIA)

SeanCampbell

ChiefEconomist,

HeadofPolicyResearch

FinancialServicesForum

(FSF)

JessicaRenier

ManagingDirector,DigitalFinance

InstituteofInternational

Finance(IIF)

JohnCourt

EVP-GeneralCounsel

&COO

BankPolicyInstitute

(BPI)

TechnicalAdvisors

RoyChoudhury

ManagingDirector&SeniorPartner

BostonConsultingGroup

(BCG)

ColinLloyd

Partner

SullivanandCromwellLLP

EtayKatz

Partner,HeadofDigitalAssetsand

FinancialInnovation

AshurstLLP

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS4

Thisreportservesasanupdatetothe2023publicationTheImpactofDistributerLedgerTechnologyInCapitalMarketandseekstoprovideanupdatedassessmentoftheopportunitiesandrisksposedbydistributedledgertechnology–includingDLT-basedSecurities(bothtokenizedsecuritiesandDLT-nativesecuritytokens)–andassociatedactivitiesacrosstheend-to-endsecuritieslifecycle.Co-developedwithmembersofabroadsetoftradeassociations(see

Foreword

,hereafterreferredtoasthe“JointTrades”),thereportrepresentstheperspectivesofindustrypractitionerswhoarepioneeringresearchandreal-worldapplicationsofDLTusecasesacrosstheworld.

SCOPEOFTHISREPORT

ImplementationModels:ThisreportexplorestwodiferentimplementationmodelsofDLTforuseacrossthesecuritieslifecyclebyregulatedfinancialinstitutions:“BooksandRecords”,and“Tokenization”.Thesearedefinedasfollows:

?“BooksandRecords”:Existinginternalrecordkeeping,accounting,reporting,andotherback-officefunctionscentrallyadministeredbyafinancialinstitution(s),whichcanbesupportedbyDLT-basedinfrastructure;and

?“Tokenization”:Digitalrepresentationofsecuritiesandpaymentinstrumentsonadistributedledger,relectinganownershiprightoftheunderlyingasset,anditstransferbetweenentitiesusingtheledger.ThereportassumesthatDLTistheenablingtechnologyandcatalystforTokenization.AlthoughsomefeaturesofTokenizationcanbeachievedwithoutDLT(e.g.,precisionsettlementandfractionalization),thisisoutofscopeforthisreportgivenmarketadoptionofDLT.

AssetClassesandTypes:ThecoreassetclassesinscopearetheDLT-basedformsoftraditionalequityandfixedincomesecurities(includingasset-backedsecurities),includingsecuritiescollateralheldinrelationtoderivativetransactions.2Theseassetscanexistonadistributedledgerintwoformats:

1.“TokenizedSecurities”,whichareissuedandcustodiedtraditionally,butalsorepresentedonadistributedledgerthroughadigitaltwintokenthatrepresentstheunderlyingtraditionalsecurity;and

2.“SecurityTokens”,whichareissuedandcustodiednativelyonadistributedledgeronlyandthereforedonothaveatraditionalsecurityasanunderlyingbasis.

Itisimportanttodistinguishbetweenthetwobecausetheyposesignificantlydiferentimplicationsacrossthesecuritieslifecycle.Whereadistinctionisnotrequired,theyarecollectivelyreferredtoas“DLT-basedSecurities”.

PrudentialClassification:Thesein-scopeassetclassesandtypeseithermeettheclassificationconditionsforGroup1adigitalassetsassetoutbytheBaselCommitteeonBankingSupervision(“BCBS”)underitsrevised“SCO60:Cryptoassetexposures”standardintheBaselFramework3,whetherrecordedonpermissionedledgersor,whererobusttoken-levelgovernanceandcompliancecontrolsexist,onpermissionlessnetworks,orareacknowledgedasoutofscopeforthisframework.4

PaymentInstruments:Inadditiontothecorescopeofthisreport,paymentinstrumentsthatarerepresentedonadistributedledgerthroughTokenizationorotherwisearealsoconsideredastheyrelatetocapitalmarketsactivities.5Thesearedefinedastokenizedcommercialbankmonies;tokenizeddeposits(wheretheownershipofcommercialbankdepositsisrelectednativelyonadistributedledger);useofDLTbycentralbanks,financialinstitutions,andpaymentinstitutionstofacilitatepaymentsamongwholesalemarketparticipants;and/orregulatedStablecoininstruments.6

Theywillbecollectivelyreferredtoas“DLT-basedPaymentInstruments”.MembersunderlinetheimportanceofDLT-basedPaymentInstrumentstorealizethebenefitsofDelivery-versus-Payment(“DvP”)settlementforDLT-basedSecuritiestransactions,thedistributionofcoupons,dividendsandotherproceedsonadistributedledger.7

2.Tokenizationalsoincludestherepresentationofothertangibleassets(e.g.,commodities)andintangibleassets(e.g.,copyrightsandpatents)onadistributedledger,butthisisoutofscopeforthisreport.AdditionalusecasesforTokenizationalsoexistbutareoutofscopeforthisreport.

3.TheBaselFrameworkisthefullsetofstandardsoftheBCBS,whichistheprimaryglobalstandardsetterfortheprudentialregulationofbanks.

4.BCBS,“Prudentialtreatmentofcryptoassetexposures,”November27,2024;seeSCO60.3forspeciicdetailonCBDCsetc.

5.TheuseofmoneyanddepositsasanassetclassinthisreportdoesnotincludeForeignExchange.WithrespecttoDLTplatformsdesignedprimarilytofacilitatepayments,thisreportdoesnotaddressthesesystemsgenerally,butinsteadfocusesonconsiderationsthatmaybeapplicabletotheuseoftheseplatformsinconnectionwithcapitalmarketsactivities.

6.ForadetaileddescriptionoftheseDLT-BasedPaymentinstruments,wedirectreaderstoChapter1.3.1–DLT-BasedPaymentInstruments.

7.ASIFMA,“TokenizedSecurities:ARoadmapforMarketParticipantsandRegulators”,2019.

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS5

USECASESINFOCUS:

Themarkethasmaturedfrompredominantlyexperimentalpilotstoliveusecases,withscalinginstitutionaladoption.DLThasbecomemeaningfulinreshapingcollateralmanagement,improvingfixedincomeissuance,andacceleratingfundtokenization,deliveringoperationalimprovementsandsettingthestageforbroadermarkettransformation.

CollateralmanagementhasbenefitedfromDLT-enabledintradayrepos,addressinginefficienciesrelatedtodelayedsettlement,fragmentedsystems,andlimitedliquidityreuse.PlatformssuchasJ.P.Morgan’sKinexysandBroadridge’sDistributedLedgerRepo(DLR)havedemonstratedvalue.J.P.Morgan’sKinexys,forexample,tokenizescashandcollateraltoexecuteintradayreposwithinminutes,integratingseamlesslyintotraditionalbankingsystems.

Similarly,Broadridge’sDLRutilizedsmartcontractstoautomatebilateralrepoprocessing.Theresultsarenotable:

Settlementtimesreducedfromseveralhourstomereseconds.

Dramaticallyloweredoperationalrisksandfundingcosts.

Increasedefficiencyincollateralreuseandliquiditymanagement.

Improvedregulatorytransparencyandreportingcapabilities.

DLTalsoreshapedfixedincomemarketsthroughdigitalbondissuance,transformingahistoricallymanualprocesscharacterizedbydelayedsettlementsandsignificantreconciliationburdens.Real-worldapplicationsincludeUBS’sCHF375millionbondissuanceontheSIXDigitalExchange(SDX),achievingimmediatesettlementwhilepreservinginteroperabilitywithtraditionalinvestorchannels.AnothermilestonewastheAsianInfrastructureInvestmentBank’s(AIIB)$500milliondigitalbond,issuedviaEuroclear’sD-FMIplatform,combiningDLT-basedsettlementwithtraditionalinfrastructureintegration.Thisinnovationledtotangiblebenefits:

Moreefficientsettlementcycles.

Loweredissuanceandreconciliationcosts.

Expandedinvestoraccessibilitythroughduallistingandseamlesscross-platforminteroperability.

Fundmanagementhasseensubstantialprogressviatokenization,particularlywithdigitalmoneymarketfunds,addressingsettlementdelaysandinefficientcashmanagementpractices.FranklinTempleton’sFOBXX,amoneymarketfundoperatingentirelyonapublicblockchain,hasreachedassetsundermanagementexceeding$740million,enablingreal-timetrackingandinstantpeer-to-peertransferability.Similarly,BlackRock’stokenizedliquidityfundBUIDL,managingmorethan$2billionthroughmulti-chainissuance,hasdemonstratedsignificantadoption.Spiko’stokenizedEUTreasuryBillsUCITSfundofers24/7accessandimmediateredemptionsthroughpublicblockchainplatforms,highlightingtransformativeimpacts:

Instantsettlementandreal-timenetassetvaluation(NAV)calculation.

Improvedcollateralutilityandliquidity.

Simplifiedcomplianceandenhancedinvestoronboardingefficiency.

ThesesuccessfulimplementationsindicateDLT’spotentialtobecomefoundationalincapitalmarkets,signalingahybridfuturewheredigitalandtraditionalinfrastructurescoexist,mutuallyreinforcingtheirstrengthsandpavingthewayforcontinuedmarketmodernization.Tofullyrealizethishybridvisionandscaletheinitialsuccessesintoindustry-widetransformation,marketparticipantsmustnowaddressspecificfoundationalrequirements.

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS6

CALLTOACTION:RECOMMENDATIONSTOBUILDMOMENTUM

Thefindingsinthisreporthighlightseveralcriticalstepsneededtosupportthenextphaseofadoptionincapitalmarkets.Whileearlyimplementationshavegainedtraction,particularlyacrossspecificassetclassesinbothprimaryandsecondarymarkets,broaderecosystemdevelopmentremainsinatransitionalstage.Atthisjuncture,itisessentialforallmarketparticipants,includingfinancialinstitutions,infrastructureproviders,regulators,andtechnologyvendors,tocollaborateinshapingthecorecomponentsofaresilientandscalableDLTecosystem.

Toaccelerateecosystemmaturity,thefollowingcallstoactionaredirectedatmobilizingpublicandprivatestakeholderstowardsmeaningfulandsustainableprogress.Governmentsestablishingapro-innovationmandatetofostergrowthandcompetition,andmarketintegrity,whileprotectingclients,investorsandendusers,sendsthenecessarysignalfortheprivatesectortounlockinvestmenttodeliverenhancementsfortheecosystem.Whilepublicpolicyandregulatoryclarityremaincrucialenablers,thisroadmapprioritizesactionsthatcanbetakennow,unilaterallyorincollaborationwithpeers,tobuildsustainablemomentumandunlockvalue:

1|AccelerateMarketDevelopmentinHigh-PotentialAssetClasses:Toacceleratetokenization,theindustryiscurrentlyprioritizinghigh-impactassetclassessuchasprivatecredit,andmoneymarketfunds.Buildingscalableinfrastructure,enablingbroadinvestoraccess,andembeddingprogrammabilityintodesignwilldrivemarketdepth.Regulatoryenablementandsupportforinnovation,includingtokenizedinstrumentsinexistingframeworksandpublic-sectorissuancecancatalyzecross-borderadoptionandunlockinstitutional-gradeliquidityatscale.

2|ClarifyLegalFoundationsandAlignRegulatoryTreatment:Tounlockthefullpotentialoftokenizedcapitalmarketsglobally,furthertimelyactionisneededtoestablishclear,consistentlegalframeworks.Withcoordinatedregulatoryreformandindustrycoordination,tokenizedinstrumentscanachievelegalcertainty,enablingcross-borderadoption,improvingmarketconfidence,andacceleratinginstitutional-scaledeployment.

3|EstablishInteroperabilitytoPreventMarketFragmentation:Torealizethefullbenefitsoftokenization,interoperabilitymustbeprioritized.Industry,incollaborationwithregulators,shouldalignoncommondatamodels,smartcontractstandards,andmessagingprotocols.Byembeddinginteroperabilityintoinfrastructuredesignandregulatoryframeworks,wecanreducefragmentation,lowerintegrationcosts,andunlockscalable,cross-platformmarketconnectivity.Thebuildingblocksforthiscoordinationalreadyexist,nowisthetimetoact.

4|AddressTechnicalandOperationalIntegrationGaps:Toenableinstitutionaladoption,DLTplatformsmustmeethighoperationalandsecuritystandards.Industryshouldidentifyminimumrequirementsforwalletcustody,smartcontractgovernance,andsystemintegrationinamannerconsistentwithappropriateregulatorystandards.Withrobustframeworks,auditability,andstandardizedAPIs,institutionscansafelyscaletokenizationwhilealigningwithexistingoperationalandregulatorypractices.Coordinationandinvestmentnowwillensuresecureandseamlessfuturedeployment.

5|EnableScalableSettlementwithTokenizedMoneyandStablePaymentInstruments:Tounlockthefullbenefitsoftokenizedmarkets,scalableon-chainsettlementwithDLT-basedPaymentInstrumentsisessential.Industryshouldintegratetokenizeddepositsandstablecoinsintosettlementworklows,enablingatomicDvPandprogrammablepayments.Regulatoryclarityandinteroperabilitywithcentralbanksystemswillensuresecure,efficient,andcontinuoussettlementacrossdigitalandtraditionalrails.

6|FosterPublic-PrivateCoordination:Toscaletokenizedmarkets,publicandprivatesectorsmustalignoninstitutionaluseofDLTinfrastructureinsuchcasesofcustody,identity,compliance,andsettlement.Industryshouldadoptopen,collaborativemodelsandsupportjointpilots.Policymakerscanaccelerateprogressbyharmonizingcross-borderlegalstandardstofosterfundingofcriticalinfrastructure.

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS7

REPORTOVERVIEW

Thefullreportthatfollowsprovidesagranular,bottom-upanalysisacrossthetopicsexploredintheExecutiveSummary.ThisincludesadetailedoverviewofDLT,includingtheinfrastructureandthedigitalassetsrepresentedonthisinfrastructure,aphase-by-phaseimpactassessmentacrossthesecuritieslifecycle,anexplorationofliveusecases,legalandregulatoryconsiderationsandrecommendations,andbarrierstoadoption.Toclosethereport,jointtradesandmemberspresentcriticalcallstoactionfrommarketparticipantstodriveprogresstowardsnetworkefects,workingindialogueacrosskeyareas.Forregulators,itcouldhelpinformefortsaroundemerginglegalandregulatoryframeworks,withaviewtoprotectingmarketsandpromotinginnovation.Forindustry,itprovidesdetailedpotentialareasforfurtherdialoguetoaccelerateongoingresearchanddevelopment.

Asanoverarchingguidingprinciple,legalandregulatoryframeworksshouldbedesignedinlinewiththe“sameactivity,samerisk,sameregulatoryoutcome”and“technology-neutral”risk-basedguidingprinciplesthatsupport,ratherthandeter,industryinnovationandadoption.JointtradesandmembersunderlinetheimportanceforallmarketparticipantstocontributetowardongoingresearchanddevelopmentofDLT,andtherepresentationofsecuritiesandpaymentinstrumentsonthisinfrastructure.Punitivepenaltiesfortheuseofaparticulartechnology,withoutclearlydefinedrisk-basedjustification,couldbedetrimentaltoinnovationinthemarketandhaveunintendedconsequencesontheevolutionofafutureDLT-basedmarketstructurewithintheregulatoryperimeter.

Significantcontributionshavebeenmadebyawideselectionofjointtrademembersandnon-membersacrossthefinancialservicesecosystem,togetherwithindustrialandlegaladvisers.Engagementhasalsobeenheldwithregulatorybodiesacrossjurisdictionstoensurecentralareasofconcernareaddressed.Wehopethisprovidesavalue-addedperspectivethatdrivespublic-privatedialogueandadvancesprogressonthetopic.

Forfurtherdetails,pleaseseethefollowingchaptersofthisreport:

?Chapter1:DLTTechnologyandTokenization|Providingaclearandunambiguousdefinitionofthekeytermsandconceptsrequiredwiththegoalofprovidingaconsistentcross-industryframeworkfordiscussionsofDLT,Tokenization,technology,andinfrastructure.

?Chapter2:OpportunitiesandRisks:ImpactAcrosstheSecuritiesLifecycle|Examiningtheimpactacrosstheend-to-endsecuritieslifecycleonrolesandresponsibilities,worklowsandactivities,technologyandinfrastructure,financials,andexistinglevelsofrisk.

?Chapter3:TowardsaFuture-DLT-BasedEcosystem|Outliningwhatapotentialfuture-stateDLT-basedecosystemmaylooklike,barrierstoadoptionsandtheroleofregulatedinstitutionsinaDLT-basedfuture.

?Chapter4:LegalandRegulatoryLandscape|DemonstratingwhereexistingregulationsufficientlyaddressesDLT-enabledoperationsandTokenizedSecuritiesandhighlightinggapsinlegalandregulatoryframeworksbasedonthe“samerisk,sameregulatoryoutcome”principal

?Chapter5:ConclusionandCalltoAction|Asetofsix,pragmaticnextstepsforindustryparticipantstoworktowardsadesirablefuture.Prioritizesfocusareasthatrequirecross-industrycollaborationandpublic-privatedialoguetounblockanddriveprogress.

?DeepDives:AssessingSelectExamplesofScaledAdoption|Exploringreal-worldusecases,developedwithjointtradesandmembers,toprovideinsightsandbestpracticesonhowexistingrisk-managementapproachesarebeingusedtodrivedecisionsaroundtechnologyandgovernance.

TheJointTradesonbehalfoftheirmembersrecognizethegrowingrelevanceofDLTtoglobalcapitalmarketsand

theextensiveresearchbackingitsadoption.Webelievethisreportwillproveavaluableassettopolicymakers,

regulators,andgovernmentalauthorities,fosteringdeepercollaborationonDLT'spotential

toreshapeglobalcapitalmarkets.

THEIMPACTOFDISTRIBUTEDLEDGERTECHNOLOGYINCAPITALMARKETS8

Globalcapitalmarketsareenteringanewphasewheretokenization–therepresentationoffinancialassetsondistributedledgers–ispoisedformassadoption.Keybuildingblocksthatwerenascentafewyearsagohavematured.Marketinfrastructureisincreasinglyrobustandinterconnected:majorbanksandmarketutilitieshavelaunchedlivedistributedledgerplatforms,andsettlementnetworksareachievingsignificantscale.Forexample,J.P.Morgan’sKinexysdigitalassetsnetworkhasprocessedover$1.5trillionintransactions(averaging$2billiondaily)fortokenizeddepositsandcollateraltransfers,demonstratingthatinstitutional-gradeblockchainsystemscanhandlerealvolumes.8Likewise,centralbankandregulatoryexperimentsarevalidatingthetechnology,fromcross-borderpaymentpilotstoon-chainbondissuances,demonstratingthatdistributedledgersmaybeabletooperatewithinexistingmarketecosystems.

Crucially,regulatoryclarityhasimprovedinmultiplejurisdictions,loweringakeybarriertoinstitutionaladoption.Policymakersareestablishingframeworksthatrecognizetokenizedassetsandprovideguardrailsfortheiruse,andwiderDLTimplementationacrossfinancialservices.

IntheU.S.,developmentsandupdatedpolicyguidancefromtheWhiteHouse,theSecuritiesandExchangeCommission(“SEC”),federalbankingregulators,andCongresshaveacceleratedamoresupportiveregulatoryenvironment.OnJuly30th,thePresident’sWorkingGrouponDigitalAssetMarketsreleasedareportoutliningtheadministration’sstancesonvariousaspectsofdigitalassetregulationandlegislation,whilecallingforregulatoryagenciesandCongresstoworktogetherandcreateapro-innovationregulatoryregimefordigitalassets.TheSEChasestablishedadedicatedCryptoTaskForceandpublishedguidancetoclarifytheagen