Companies on the Australian Stock Exchange (ASX) may be able to trade tokenized bonds, shares, funds or carbon credits following a successful proof of concept led by digital asset investment platform Zerocap.
On Monday, the digital asset investment platform Melbourne-based Zerocap told Cointelegraph that it had successfully used Synfini to bypass its custody infrastructure on the platform as part of a test program, enabling trading and clearing of Ethereum-based tokenized assets..
The test is part of ASX’s distributed ledger technology (DLT)-based settlement project Synfini, which launched in November. The platform offers clients access to ASX’s DLT infrastructure, data hosting and ledger services, allowing them to build blockchain applications on top of it.
Zerocap co-founder and CEO Ryan McCall stated that it occurred last year and that “raised a lot of interest” in the institutional sphere, especially from companies that explore ways to tokenize and market bonds, funds or carbon credits:
“Thinking beyond Bitcoin, Ethereum and other crypto assets, the tokenization of bonds, stocks, property, carbon credits, private equity, and anything that is essentially illiquid, there is a strong value proposition here, which essentially holds that we can tokenize any asset and bridge that into the ASX ecosystem.”
McCall stressed that companies dealing with particularly “opaque and difficult to access” markets, such as bonds and carbon credits, are looking for ways to reduce costs efficiently, save time on issuance and open up wider access to investment through tokenized offerings.
Asked if ASX could offer cryptocurrency trading through Synfini, McCall said “yes” but that he hasn’t seen any indicators of interest in the field.as ASX and others focus primarily on tokenizing traditional/real-world assets.
However, it should be noted that Synfini is an independent initiative of the ASX replacement system, based on blockchain, which has not yet been launched after years of technical problems..
McCall suggested that Zerocap may be looking to officially launch asset tokenization and trading services through Synfini to institutions in the near future.since it has just passed the necessary steps for legal approval.
“Since then, we’ve gone through the certification process to get into the production environment, which is a pretty strict process by itself for any type of enterprise software, but certainly more so for an exchange. So We have just passed the production certification. So we’re getting ready to roll it out,” he said..
McCall also noted that, as ASX is a reputable source for hosting digital asset trading, this is likely to reduce institutional concerns about counterparty risk related to the cryptocurrency sector.
These risks have been very prevalent this year as a number of major cryptocurrency companies have experienced liquidity problems or gone out of business altogether, such as in the case of Celsius, Voyager Digital and Three Arrows Capital:
“So counterparty risk, you know, credit risk specifically, I think is the biggest point of contention in the crypto space right now given the 3AC debacle. And I think that shows the use case for what ASX is trying to have here.”
“Thinking about the ecosystem and investor protection and all the things it offers, something like that is definitely needed in the digital asset space,” he added..
Zerocap’s CEO also suggested that Synfini will likely be used by a wide range of businesses as the platform is easy to use and removes a lot of variables for businesses..
“If a custodian or a fund manager or any application developer wants to come in and build a blockchain application, they can do it on this Synfini platform without really having to worry about managing any infrastructure, which is pretty cool,” he said..
Zerocap recently participated in a tokenized carbon credits transaction in late June, with the firm providing liquidity and market making services for a swap between major Australian family office Victor Smorgon Group and BetaCarbon.a blockchain-based carbon trading platform.
The trade was also facilitated through A$DC, a fully collateralized AUD stablecoin developed by Australian bank ANZ.one of the big four.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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