What Asset Managers Need to Know About Cryptoassets in 2024
Swiss professionals are familiar with the complexities and challenges associated with cross-border payments. As the payments industry grows, it is changing how asset managers conduct cross-border transactions. Transparency, speed, and low transaction costs are the three main points of this article examining blockchain's effect on international money transfers. We also discuss XEROF's third-party settlement feature, which offers a strategic advantage for asset managers, and more.
Embracing Cryptoassets: Drivers for Asset Managers
Asset managers are turning to digital assets for three key reasons. First, building capabilities and experience in this burgeoning asset class is imperative to remain competitive. Finance professionals recognise the increasing use of cryptoasset models to tokenise traditional assets, boosting liquidity and operational efficiency.
The second driver is to gain advantages as early adopters of Web3. Especially prominent among venture capitalists, there is a quest for solutions and technologies shaping the next phase of the internet. This involves focusing on cryptoassets, marketplaces, and their underlying technology infrastructure.
Lastly, the pursuit of returns remains a strong incentive. Instances of substantial returns from strategic investments in cryptoassets abound. Risk-tolerant investors can weather adoption and low activity periods by planning for market rebounds and speculation despite the higher risks and price volatility compared to more traditional asset classes.
In Switzerland, one association that recognises the power of blockchain technology is the Asset Management Association (AMAS). AMAS serves as the official industry body for the Swiss asset management sector. Its objective is to fortify Switzerland's position as a foremost asset management hub, upholding rigorous quality, performance, and sustainability standards. The association recognises the value of tokenising digital assets and actively aids its members in the continual growth of the Swiss asset management industry.
Recently, XEROF supported an insightful seminar hosted by AMAS and Hansjörg Hettich held at MME Offices.
Blockchain's Disruptive Influence on Cross-Border Payments
At its core, blockchain is a decentralised and distributed ledger technology; its application to cross-border payments addresses several pain points asset managers face. One of the primary advantages is the increase in transaction speed. Traditional cross-border transactions often involve multiple intermediaries, leading to delays and increased costs. Blockchain technology enables direct peer-to-peer transactions, eliminating the need for intermediaries and ensuring near-instantaneous settlement, regardless of geographical boundaries or banking hours.
Cost reduction is another factor; traditional payment methods incur expenses related to intermediary fees, currency conversion, and processing delays. Blockchain technology allows asset managers to cut down on transaction fees by doing away with intermediaries in favour of direct transactions. The cost efficiency of blockchain transactions is especially pertinent for Swiss asset managers engaged in international investments, providing a competitive edge in a cost-conscious market.
Transparency, a critical aspect of any financial transaction, is enhanced through blockchain. Every transaction recorded on the blockchain is visible to all participants, creating an auditable and transparent payment trail. This transparency reduces the need for third-party audits and facilitates real-time transaction monitoring. In an era where accountability and visibility are paramount, blockchain's transparency allows asset managers to build trust with clients and regulatory bodies.
Tokenisation of Financial Instruments and Payment Solutions
For asset managers, one particularly alluring aspect of cross-border payments through blockchain technology is the tokenisation of financial instruments.
The tokenisation of financial instruments involves representing real-world assets digitally on a blockchain, enabling fractional ownership and trading. The EU's Regulation (EU) 2022/858 became effective on March 23, 2023, enabling market infrastructures to seek authorisation for trading tokenised financial instruments on distributed ledger technology (DLT) platforms. Shares, bonds, and fund units can be tokenised, offering increased liquidity, reduced costs, and enhanced speed in trading and settlement globally.
Beyond enhancing the trading process, the advantages of tokenisation extend to post-trading activities, where smart contracts can automate actions based on specific events, reducing the reliance on intermediaries for tasks like clearing and settlement.
As a result, Swiss asset managers can reach more investors and streamline their operations.
Similarly, the convergence of payment instruments with digital assets and cryptoasset platforms presents new opportunities for asset managers. Tokenised cross-border payment instruments enhance security and open doors to innovative payment solutions, aligning with the evolving needs of investors.
XEROF's Third-Party Settlement Features
With XEROF, investors and asset managers can settle digital-to-fiat transactions directly into an intermediary's account. This functionality greatly simplifies the purchasing process for high-end acquisitions.
By providing a secure and efficient settlement platform, XEROF enables asset managers to focus on their core competencies without burdening the intricacies of cross-border payments, tax optimisation and regulatory compliance.
Furthermore, XEROF operates within a precision-regulated framework emphasising efficiency to bring about substantial cost savings and a streamlined process, facilitating frictionless transitions between diverse asset classes. Our strategic alliances with robust banking partners highlight our financial stability and ensure our settlement platform's reliability and security.
Learn More About Cross-Border Payment Technology
Blockchain technology presents an exciting alternative to traditional cross-border payment systems. Through the elimination of intermediaries, blockchain-based payment systems hold the potential to decrease transaction costs, enhance efficiency, and bolster security. This is excellent news for asset managers and investors, promising expedited, cost-effective, and secure transactions.
With our unique third-party settlement feature, XEROF stands out as a reliable partner for Swiss asset managers seeking to thrive in the era of blockchain-driven transformation.
To learn more about cross-border payment technology, contact us to arrange a meeting.
XEROF is a Swiss-licensed Crypto Gateway that offers exchange services for customers who possess crypto wallets and want to use them as fiat currency to purchase real estate properties and luxury goods.Learn more about XEROF