Top Institutions Point to Blockchain Interoperability as Critical to Asset Tokenization

Citi, Deutsche Bank, Mastercard,
Northern Trust and Centrifuge provide insights on paths to secure, multichain
asset tokenization for report produced by Axelar Foundation and Metrika

A group
of leading financial institutions and Web3 innovators have contributed to an
in-depth paper on a path to achieve interoperability for tokenized assets
across public blockchains, private blockchains, and legacy systems.

Published
today, “Institutional Interoperability: How Financial Institutions Navigate a
Multichain World” addresses how to achieve increased accessibility and
liquidity for tokenized assets, with flexibility, privacy, transparency and
scalability.

Tokenized
assets are on-chain representations of financial assets such as real estate,
currencies and securities. A recent report authored by Boston Consulting Group
and market operator ADDX predicts multi-trillion-dollar value in tokenized
assets within the decade. All institutions participating in the paper
emphasized the need for interlinked network models that embrace multiple
blockchains, as well as traditional systems, in order to realize this
potential.

Financial
institutions Citi, Deutsche Bank, Mastercard and Northern Trust contributed
insights to the paper in spotlight sections. Topics covered include
descriptions of their projects in asset tokenization, points where they have
implemented multiple blockchains, and potential requirements and challenges for
blockchain interoperability. Web3-native innovators Axelar Foundation,
Centrifuge and Metrika also contributed to the paper.

The
paper acts as a road map for financial institutions developing tokenized-asset
opportunities and facing a complex array of blockchains public and private,
alongside stringent requirements imposed by clients and regulations. It was
authored by blockchain analyst Emily Parker, based on a framework laid by the
Monetary Authority of Singapore’s Project Guardian in 2023.

Contributors
to the paper will be invited to discuss the paper’s findings in a panel event
at Point Zero Forum in Zurich, July 1-3.

“Tokenized
assets are by design interoperable, bridging assets recorded on off-chain
ledgers with on-chain representations,” said Georgios Vlachos, director of
Axelar Foundation and co-founder of Axelar protocol. “The question isn’t,
how do we facilitate one such connection – it’s how do we facilitate
potentially thousands of connections across on-chain and off-chain ledgers, in
a way that’s secure, scalable and open.” “Multichain asset
interoperability and servicing will in all likelihood become a necessity for
securities service providers as their clients adopt different chains,” said
Anand Rengarajan, managing director, global head of sales & head of
securities services APAC, Corporate Bank, Deutsche Bank.

“It will
be essential that asset servicers know how to address and service
interoperability – between chains and with traditional processes – on a cost
and risks-managed basis to enable sustainable growth that multiple chains can
amplify.”

“Northern
Trust is preparing for significant growth in the share of its assets under
custody that are tokenized on-chain,” said Alvin Chia, head of digital
assets innovation for Asia Pacific at Northern Trust. “To provide the best
services possible to our clients, we’ll need to participate actively in the
blockchain ecosystem, connecting multiple blockchains with tailored approaches
at multiple points.”“Asset tokenization brings major advantages in access and liquidity
– and with a modular, multichain architecture, it can also do a great deal to
improve visibility and on-chain utility,” said Bhaji Illuminati, CMO of
Centrifuge.

“This is
Centrifuge’s path to enable flexibility and scalability in the rapidly evolving
RWA ecosystem.”“Tokenized assets hold transformative potential for financial
institutions, and interoperability in tandem with risk management is key to
unlocking that potential,” said Nikos Andrikogiannopoulos, Founder and CEO
of Metrika. “Effective risk management and ongoing surveillance ensure
these digital assets seamlessly, reliably and securely integrate into existing
financial systems, fostering confidence, accessibility, liquidity and
innovation.”

About Axelar

Axelar (https://axelar.network)
is the Web3
interoperability platform, delivering the shortest path to scale on an open
stack to connect all blockchains. Adopters include Uniswap, Microsoft and
dozens of natively multichain startups, building applications to reach all
blockchain users at once – 10X as many active users as the leading Web3
application environment. Axelar supports smart contracts on a cross-chain layer
that is open, scalable and secure. Backers include Binance, Coinbase,
Dragonfly, Galaxy and Polychain.

About Axelar Foundation

Axelar
Foundation is a nonprofit established to support the growth and adoption of the
Axelar network, a decentralized interoperability network that connects multiple
blockchain ecosystems.

About Centrifuge

Founded
in 2017, Centrifuge creates better technology for financial products.
Centrifuge provides asset managers a way to tokenize, manage and distribute
their funds on-chain and investors better access to a diversified portfolio of
high-quality tokenized assets.

About Metrika

Metrika
is the definitive industry leader in blockchain risk management, enabling you
to proactively assess risks and guarantee compliance across digital asset
services. Implement strategic risk frameworks, navigate regulatory compliance
by jurisdiction, and shield your operations from emerging risks with ongoing
monitoring and surveillance.

This article was written by FL Contributors at www.forexlive.com.