Blockchain Legitimacy in the Financial Industry
At this early stage when specific legislation has not yet been developed and we are still figuring out the opportunities and challenges of web 3.0, this article provides an overview of the approaches used to determine the legitimacy of digital financial assets.
Trust in specific service providers as well as in the financial system as a whole determines the level of confidence in new financial services. Due to this, financial service stakeholders are crucial in legitimising new technologies and fostering trust. Banks and other financial institutions need to investigate technology solutions and trade-offs, as well as security and regulatory implications, when researching the technology that will allow them to work with digital financial assets in the future.
Despite the excitement and prospects surrounding blockchain technology, this is still a very early point in the stage of innovation and democratisation of the financial market. As new digital assets and crypto services emerge in the ecosystem, financial institutions and regulators should prepare themselves for a dynamic and diversified future. Developing a consistent, worldwide, and innovative governance landscape for digital assets is a difficult responsibility. However, the current gaps and discrepancies could be overcome by harmonised standards and cross-jurisdictional cooperation mechanisms.
Figure 1. Visualization of the 5 Attributes of Money, adapted from the Bank for International Settlements (BIS) money flower
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