Opinion

Embracing blockchain in asset management: How to get started

 How to get startedKevin Monserrat, CEO of TokenSphere, delves into the crucial role of blockchain in asset management, offering a roadmap for fund administrators to navigate and capitalise on this technological evolution.

As the asset management industry increasingly looks towards blockchain technology, Fund Administrators face the crucial task of navigating this new terrain. This journey, while challenging, offers immense potential for innovation, efficiency, and growth. It's a path from uncertainty to strategic advantage, mirroring the evolution of the cloud computing revolution.

Preparing for the blockchain revolution

 The first step in embracing blockchain is a mindset shift. Fund Administrators must be willing to explore and adapt to new technologies. This journey parallels the early days of cloud computing, where scepticism gradually gave way to widespread adoption. Fund Administrators need to recognise blockchain not just as a technological upgrade but as a strategic tool to enhance their services, improve efficiency, and stay ahead in a competitive market.

Key decisions in embracing tokenised funds

As the industry gravitates towards tokenisation, Fund Administrators must make pivotal decisions about their blockchain strategy. This includes:

  • Choosing the right blockchain infrastructure: Deciding between a public or a private blockchain is akin to choosing between the internet and an intranet. A public blockchain offers decentralisation, robust security, resiliency, and great room for reducing audit time (near zero) but may have limitations in speed and higher transaction fees. On the other hand, a private blockchain offers more control and potentially faster transaction speeds but with reduced decentralisation and potential security risks.

  • Balancing costs, compliance and security: The chosen blockchain should be cost-effective without compromising regulatory compliance and data security. It’s essential to find a balance that aligns with the operational and strategic goals of the fund.

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  Source: Solana Vs. Polygon Vs. Ethereum – The Ultimate Comparison

User-friendly solutions for a web3 world

In the realm of blockchain and tokenisation, user-friendliness is paramount. The ideal blockchain solution should be intuitive and accessible, like a smartphone. This approach ensures that the transformative benefits of blockchain are available to all stakeholders, regardless of their technical expertise. By prioritising ease of use, Fund administrators can facilitate wider adoption and integration of blockchain technologies in their operations.

Conclusion

The transition to blockchain in asset management is an exciting and transformative journey. For Fund Administrators, it involves making informed choices about infrastructure, balancing costs with compliance and security, and ensuring that technology remains accessible to all users. As we move into this new era of tokenisation and digital assets, we should focus on leveraging blockchain to enhance efficiency, transparency and service quality in asset management. This approach will not only meet the evolving demands of clients but also position Fund Administrators as forward-thinking leaders in the digital transformation of the industry.

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