A Group of 30 Global Central Securities Depositories Is Exploring Crypto Custody

A group of central securities depositories in Europe and Asia is taking a serious look at how they might collaborate on infrastructure to custody digital assets.

Far from the "Blockchain not bitcoin" mentality that such enterprises exemplified a few years ago, the group's focus is looking at how to protect these keys for crypto investors, and how the tokenization of everything stands to change well, everything.

"A new world of tokenized assets and blockchain is coming. It will probably disrupt our role as CSDs. The whole group decided we will be focusing on tokenized assets, not just blockchain but on real digital assets."

Since coming together under the auspices of the International Securities Services Association last year, the CSDs' crypto-asset initiative has doubled in size to over 30 participants.

Key members in the next stage are NSD, Belgium-based Euroclear, Swiss stock exchange SIX, and the Abu Dhabi Securities Exchange.

Alexander Chekanov, the NSD's chief architect, who is heading the working group on safekeeping of crypto assets, said the research being carried out regarding tokenized securities "Certainly applies to cryptocurrencies" as well.

Walter Verbeke, global head of business model and innovation for the Euroclear Group, said the next phase of the research will also involve some large custodian banks.

The European and Asian CSDs' newfound interest in tokenization also stands in sharp contrast to the blockchain work being done by their U.S. counterpart, the DTCC, and by the Australian Securities Exchange, which are mainly about targeting cost savings related to a distributed ledger technology settlement layer.

It's also important to note that unlike their U.S. or Aussie brethren, the European CSDs - or at least the ones in the European Union - may have a stronger incentive to pursue custody business for security tokens since they'd enjoy a captive audience.

The aim, he said, is to combine cold storage solutions with reliable business processes to ensure crypto securities cannot be lost and that the regulators will be happy no matter what happens to the status of these securities in the future.