Standardization is essential to enabling CRIPTO adoption – TradingView News

Opinion: Akel Schorn et al. The duc au

Traditional actions, bonds and department markets have long benefited from well-established standards that regulate the flow of information and data. These standards submitted a seamless functioning of trading, settlements and regulatory compliance, ensuring that all participants can rely on the same consistent frameworks.

As the financial industry ranges in decentralized finances (defi) with the introduction of digital assets, such as cryptian assets and tokenized securities, the lack of such standards is a growing challenge.

Although digital funds promise transformative potential, their fragmented informed risks in the landscape undermine their adoption and integration in a broader financial ecosystem.

Independent platforms such as coinmarketcap or coingecko provide information on various tokens, but these data are significantly vary related to market capitalization, overall supply and other relevant reference data. Several global initiatives of private foundations and associations are working on standardization.

Traditional frames as direction

Just as standardized financial data were crucial in building trust and facilitating growth, digital resources need their global standards. According to studies, standards generate total economic benefits estimated at 17 billion euros per year in Germany.

For traditional means, a clean hierarchy of the International Standardization Organization (ISO) exists on unambiguous categorization and identify any property. The International Securities Identification Number (ISIN) is a Global Standard for unique identification of all types of financial instruments, including capital, debts, derivatives and indices. The certificate of financial instruments (CFI) is an internationally recognized system for the classification of financial instruments. It is defined when a financial or reference instrument is issued and remains unchanged. The short name of the financial instrument (FISN) describes a standardized approach to short names and descriptions of financial instruments. Unlike Isina and CFI, FISN is not intended to be readable, but to provide a short format for key security information for human consumption.

National Numbering Agencies (NNA), responsible for collecting registration data, such as issuers, instrument types, trading conditions, trade conditions, assign ISIN, CFI and FISN. The Association of National Numbering Agencies maintains identifiers and data in a global database. For countries that do not NNA, four global replacement of numbering assigns the identification of these countries.

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Isini are awarded to financial instruments regardless of technology used to create appropriate instruments, both in paper form and electronic form, including tokenized instruments such as crypto securities according to German electronic securities law. For tokens with an obvious geographical reference, such as a security token, who resides in Germany, responsible NNA will assign ISIN. As for the tokens for reference instruments without apparent geographical references – e.g. Bitcoin (BTC), where the country of the issuer cannot be recognized – ISIN with the “XT” prefix is ​​assigned to the Etrading software.

This helps to identify the instrument at the token level. The more mentioned data levels at the token level are a type of token, the mechanism of the Hash and generation function. Focus on the level of instrument, additional data sheets such as token blocks are required.

To this end, the digital token identification foundation, which is responsible for the allocation of this new identifier, provides a so-called digital token identifier – e.g. DTI, ISO 24165.

Key working theses related to standardization of digital assets

CRIPTO identifiers could become compulsory. Similar to traditional means of using systems such as Isina, digital means will adopt unique identifiers for cryptocurrency and tokenized securities. These identifiers will facilitate monitoring, trading and reporting through exchange and guardianship providers, enabling seamless integrations with legacy financial systems.

Data standards will improve transparency and compliance: with increasing regulatory surveillance, standardized data formats will appear for harmonization and risk management.

Global coordination will be initiated interoperability: standardization of digital assets will rely on global cooperation between regulatory bodies and financial institutions. International organizations will play key roles in creating frameworks that provide interoperability through jurisdictions and reducing market fragmentation and, therefore, inconsistencies in handling information.

The initial steps are taken according to the unambiguous identification of digital assets with general accepted ISO identifiers. In combination with regulations across the European Union such as the Regulation on Markets in Crypto-means (MICA), the industry sets the Foundation for a significant adoption.

It remains to be seen how investors and digital player for digital assets further progress towards multiple standardization and which can result in a roadblock.

Opinion: Akel Schorn et al. The duc au

This article is for general information on the need and should not be taken as legal or investment advice. The views, thoughts and opinions are presented here, the author itself is not necessarily reflected or represent the views and opinions of the cointelegraph.