Companies on the Australian Securities Exchange (ASX) could trade tokenized bonds, stocks, funds or carbon credits after a successful proof-of-concept trial led by digital asset investment platform Zerocap.
On Monday, Melbourne-based digital asset investment platform Zerocap told Cointelegraph it had successfully used Synfini to bridge its custody infrastructure on the platform as part of a pilot program, allowing for 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 launched in November. The platform provides customers with access to ASX’s DLT infrastructure, data hosting and ledger services, enabling them to build blockchain applications from it.
Ryan McCall, co-founder and CEO of Zerocap, stated that it took place last year and that “it got a lot of interest” in the institutional sphere, particularly from companies exploring ways to symbolize and trade bonds, funds or carbon credits.
“If we think beyond Bitcoin, Ethereum and other crypto assets, the tokenization of bonds, stocks, property, carbon credit, private equity and anything essentially illiquid, there is a strong value proposition here that we can essentially tokenize any asset and bridge that into the ASX ecosystem.”
McCall outlined that the companies engaged in particularly “opaque and difficult to access markets” such as bonds and carbon credits are looking for ways to efficiently cut costs, save time on issuance and open wider access to investments through tokenized offerings.
When asked if the ASX could offer crypto trading through Synfini, McCall replied “yes”, but that he has seen no indicators of interest in this area, as the ASX and others are mainly focused on symbolizing traditional/real-world resources. .
However, it is worth noting that Synfini is a separate initiative from ASX’s blockchain-based CHESS system replacement that has yet to be implemented after years of technical difficulties.
McCall further suggested that Zerocap might consider officially launching asset tokenization and trading services through Synfini for institutions in the near future, as it has just taken the necessary steps for regulatory approval.
“Since then, we’ve gone through the certification process to get into the production environment, which, as you can probably imagine, for any kind of business software, but especially for an exchange, is a pretty rigorous process. So we just got the production certification. So get ready to deploy this now,” he said.
McCall also stressed that since the ASX is a reputable source for hosting digital asset trading, this would likely dampen institutional concerns about counterparty risk related to the crypto sector.
Such risks were very rife this year due to several major crypto firms that either faced liquidity problems or went out of business in the case of Celsius, Voyager Digital and Three Arrows Capital.
“So counterparty risk, you know, credit risk I think is the biggest talking point in crypto right now with the 3AC disaster. And I think that just demonstrates the use case for what the ASX is trying to do here. ”
“You know, when you think about the ecosystem and investor protection and all the things it offers, there’s definitely a need for something like that in digital assets,” he added.
The CEO of Zerocap also suggested that Synfini is likely to be used by a large number of companies as the platform is easy to use and takes away many variables for companies.
“If a custodian or a fund manager or an application developer wants to come and build a blockchain application, they can do it on this Synfini platform without really worrying about managing the infrastructure, which is pretty cool,” he said.
Related: ASIC Chair Suffers Huge Amount of ‘Risk-Taking’ Crypto Investors
Zerocap recently had a tokenized carbon credit transaction in late June, with the company providing 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 deal was also made possible through A$DC, a fully AUD-backed stablecoin developed by Australian bank ANZ, the ‘big four bank’.