Why now? Financial markets are Digital Asset Ready!
There is a significant opportunity to enhance liquidity, reduce operational costs and risks, and improve the stakeholder experience of Real Estate Investment Funds. These benefits are achievable with BPX, a dedicated marketplace for Real Estate Investment Funds, which provides the full workflow for issuance, trading, and lending. BPX workflows accommodate both dematerialised and tokenised securities. Funds can achieve the maximum benefits available by upgrading their dematerialised workflow to a tokenised one.
Tokenised securities, are securities that exist on Distributed Ledger Technology (DLT). The resilience and benefits of DLT have been demonstrated at scale in cryptocurrency markets. Recognising the power of DLT, from around 2015, global banks started applying and testing the technology with several use cases. After several years of testing, global banks have moved their products from the R&D stage to production and have expanded the application of DLT within their businesses. Observing the evolution and growing adoption of DLT from a distance, central banks identified the utility of DLT in its application to central bank money. Consequently, around 2020, we started to see the launch of Central Bank Digital Currencies (CBDCs).
As of today, 134 countries and currency unions, representing 98% of global GDP, are exploring transforming fiat currency into digital currencies, i.e., CBDCs. DLT has demonstrated its dexterity and been validated at the public, bank, and central bank levels, and has consequently established itself as the preferred technology for the foundation of Financial Market Infrastructure (FMI).
Digital Asset Timeline
Following market adoption of DLT, new laws and regulations in many advanced economies are changing to accommodate digital assets, paving the way for a New Age of Finance where all FMI is DLT-based. Recently, the UK has made significant legal and regulatory progress, designed to position it as a global centre for digital assets. Here is a timeline summarising the progress so far.
The resilience and benefits of distributed ledger technology (DLT) have been demonstrated at scale in cryptocurrency markets, where market capitalisation has reached approximately $2 trillion.
Global banks and other financial institutions started to experiment with DLT. Testing evolved into establishing digital asset departments dedicated to applying DLT to several use cases such as stablecoins, repo, and KYC. Many financial institutions are now expanding the application of DLT within their businesses.
Central Bank Digital Currency (CBDC) adoption started. Now, 134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC. Nineteen of the Group of 20 (G20) countries are now in the advanced stages of CBDC development.
Prospectus Regime Review. The prospectus requirements for offerings on certain types of MTFs are being changed under the proposed draft legislation. Instead of needing a lengthy and costly prospectus approved by the FCA, it is proposed that a “primary MTF operator” (e.g. BPX) can specify a shorter document with its own content and approval process.
February 2023
Bank of England (BoE) and His Majesty’s Treasury (HMT) released a consultation paper outlining the case for a digital pound.
June 2023
The UK law commissions report clarified the status of digital assets as personal property.
September 2023
The Electronic Trade Documents Act sets precedent for legal status of electronic documents.
8 Jan 2024
The Financial Services and Markets Act 2023 established the Digital Securities Sandbox (DSS) enabling firms and regulators to test the deployment of developing technologies, under the oversight of the BoE and FCA, such as DLT or other technology that facilitates ‘digital assets’ across financial markets.
25 Jan 2024
BoE and HMT response to the consultation paper confirmed they have started the design work on the digital pound.
BPX innovations
BPX is disrupting legacy processes by removing barriers and eliminating inefficiencies from traditional capital market workflows and automating processes with the latest proven technologies.
By implementing a new end-to-end digital workflow BPX is enhancing stakeholder user experience, reducing costs and risks and improving liquidity and profitability. BPX is implementing innovations and achieving desirable outcomes.
Innovations
Outcomes
Streamlining capital market workflow using new tech including distributed ledger technology (DLT) to tokenise securities and disintermediate third-party services.
Customer onboarding, securities issuance, safekeeping, settlement, and trading are simpler, faster and cheaper increasing customer participation and profitability.
World’s first real estate collateralised lending marketplace for fund unit owners.
Increases portfolio returns and liquidity for fund unit owners.
Standardising enforceable legal agreements associated with the tokenised real estate securities workflow.
Brings credibility and stakeholder confidence to the marketplace.
Participate in the Bank of England’s Digital Securities Sandbox which permits the BPX MTF to perform the role of a Central Securities Depository (CSD).
Simplifies the workflow, reduces costs and risks, and improves speed.
Cultivate a more inclusive marketplace connecting Real Estate Investment Funds and Property Developers and Owners with a wider and global investor community.
A regulated and secure marketplace with better access to a wider range of real estate investment opportunities and investors thereby fostering liquidity.
BPX Opinion
“Today, Distributed Ledger Technology (DLT) stands out as the primary driver of change in financial services.”
“In the recent past, the application of DLT in wholesale capital markets has been largely experimental; this is quickly changing as legislators and regulators are removing the barriers to digital asset adoption.“
-Ali Celiker Co-CEO
We have no doubt that DLT will fundamentally transform and enhance the foundations of financial markets.
“In our opinion, DLT represents a change of similar significance to the advent of the internet.”
-Ali Celiker Co-CEO
BPX is a significant contributor to the digital asset ecosystem
Buy-in from industry leaders
BPX convened a working group of leading companies in the digital asset ecosystem that span the capital markets value chain. The inaugural thought leadership event took place on 25 April at Cambridge University, where CEOs and senior representatives from the companies attended.
Key involvement in 2024
BPX has responded to the Bank of England’s consultation regarding the Digital Securities Sandbox (DSS), which it expects to participate in when it opens in Q4 2024
Our credible associations
BPX is a member of Global Digital Finance (GDF) and a participant in the Digital Finance APPG, helping to shape UK digital asset policy.
