Decentralized finance, digital currencies and tokenization have continued to gather momentum amid the pandemic, and State Street is seeing an increase in client demand, its regional product lead said.
«We have been actively developing our digital asset functionality for a number of years now as we see digital assets and digital infrastructure as one of the most significant forces affecting our industry over the next 5 years,» Irfan Ahmad told finews.asia in an interview.
Ahmad, who is currently based in Singapore and is the regional lead for State Street Digital, the firm's newest division, launched in June this year.
The division focuses on digital assets and technologies and encompasses the set up of a new integrated business and operating model to support clients’ entire digital investment cycle from pre-trade, trade, and post-trade, as well as other initiatives designed to enhance the client experience.
Investor Interest
According to Ahmad, the rationale for digital assets from investors’ perspective seems to be around the creation of new market settlement solutions based on value transfer rather than limited to the transfer of information, increased operational efficiencies, and the potential for enhanced liquidity and ease of distribution.
«Family offices and hedge funds were the first movers, while other institutions such as large asset managers and asset owners have been investigating and observing short-term benefits as well as greater clarity in regulation as the asset class has formalized and the industry has further matured,» Ahmad said.
Growing Division
«The launch of the firm's Digital division was the result of a culmination of our activities in the digital asset arena, together with macro indicators such as the maturation and diversification of the spectrum of digital assets beyond cryptocurrencies as well as the supporting technology infrastructure, client demand and regulatory clarity, especially amongst some key geographies in Asia, including Australia, Singapore and Japan,» Ahmad said.
The firm has already started to build and scale its digital capabilities, focusing on the growing importance of digital assets, distributed ledger technology (including blockchain), and tokenization and smart contracts, given increased client interest.
«Asset managers are looking to capitalize on progressive changes in regulation, and develop and launch exchange-traded instruments, which give their investors with direct and indirect exposure to cryptocurrencies via more familiar regulated fund structures,» Ahmad noted.
