Australian Securities Exchange takes steps towards tokenized asset trading

Australian Securities Exchange takes steps towards tokenized asset trading

Companies on the Australian Securities Exchange (ASX) may be able to trade tokenized bonds, shares, funds or carbon credits following a successful proof-of-concept trial led by digital asset investment platform Zerocap.

On Monday, Melbourne-based investment platform Zerocap told Cointelegraph that it had used Synfini to bridge its custodian infrastructure to the platform as part of a trial program, enabling the trading and clearing of Ethereum-based tokenized assets.

The trial is part of ASX’s distributed ledger technology (DLT)-based settlement project Synfini, which was launched in November. The platform gives customers access to ASX’s DLT infrastructure, data hosting and ledger services, allowing them to build blockchain applications from it.

Zerocap co-founder and CEO Ryan McCall stated that it happened last year and that “it got a lot of interest” in the institutional sphere, especially from companies exploring ways to tokenize and trade bonds, funds or carbon credits.

“When we think beyond Bitcoin, Ethereum and other cryptoassets, the tokenization of bonds, stocks, real estate, carbon credits, private equity and anything that is essentially illiquid, there is a strong value proposition here that we can essentially tokenize any asset and bridge across it into the ASX ecosystem.”

McCall outlined that the companies dealing with particularly “opaque and difficult to access markets” such as bonds and carbon credits are looking for ways to effectively cut costs, save time on issuances and open up wider investment access via tokenized offerings.

When asked if the ASX would be able to offer crypto trading via Synfini, McCall stated “yes” but that he has not seen any indicators of interest in this field, as the ASX and others are primarily focused on tokenizing traditional/real world assets .

However, it’s worth noting that Synfini is a separate initiative from the ASX’s blockchain-based CHESS system replacement that has yet to be implemented after years of technical issues.

McCall went on to suggest that Zerocap could be looking to officially launch asset tokenization and trading services via Synfini to institutions in the near future, as it has just cleared the necessary legal approval steps.

“Since then, we’ve gone through the certification process to get into the production environment, as you can probably imagine, for any kind of enterprise software, but certainly for an exchange, it’s a pretty rigorous process. So we’ve just passed the production certification. So do ready to deploy this now,” he said.

McCall also highlighted that since the ASX is a recognized source for hosting digital asset trading, this is likely to allay institutional concerns about counterparty risk associated with the crypto sector.

Such risks have been thoroughly prevalent this year due to several major crypto firms either facing liquidity problems or outright bankruptcy in the case of Celsius, Voyager Digital and Three Arrows Capital.

“So counterparty risk, you know, credit risk specifically I guess is the biggest talking point in crypto at the moment with the 3AC disaster. And I think that just demonstrates the application of what the ASX is trying to do here.”

“You know, considering the ecosystem and the investor protection and all the things it offers, there’s definitely a need for something like that in digital assets,” he added.

The Zerocap CEO also suggested that Synfini is likely to be used by a wide range of firms, as the platform is user-friendly and removes many variables for companies.

“If a custodian or a fund manager or any application developer wants to come and build a blockchain application, they can do it on this Synfini platform without really having to worry about managing any of the infrastructure, which is pretty cool,” he said .

Related: ASIC chair plagued by large numbers of “risk-taking” crypto investors

Zerocap recently had a hand in a tokenized carbon credit transaction in late June, where the firm provided market-making services and liquidity for an exchange between major Australian family office Victor Smorgon Group and BetaCarbon, a blockchain-based carbon trading platform.

The agreement was also facilitated via A$DC, a fully AUD collateralized stablecoin developed by the Australian bank ANZ “big four bank”.