Pascal Bouvier, Managing Partner of MiddleGame Ventures shared his views on the brave new world of digital assets at the annual global ICT Spring Europe conference earlier this month.
What is ICT Spring Europe?
The two-day event (rescheduled due to COVID delays) brought together over 5,000 thought leaders, entrepreneurs, and industry experts across 72 countries to share views and debate the converging future of digital, technology and science. ICT Spring is part of the broader Digital ICT Week, established by the Luxembourg Chamber of Commerce and Farvest. Luxembourg, long established as a fund distribution center, is increasingly viewed as an emerging player in the FinTech space. This is something that we at MiddleGame Ventures are very passionate about – the growth of FinTech and the continued growth of the industry within Luxembourg.
Pascal was joined by a number of ecosystem heavyweights including, Nadia Manzari Partner at Schiltz & Schiltz, Karen O’Sullivan Head of the Innovation, Payments, Market Infrastructures and Governance Department at CSSF, Vishal Sacheendran Manager of Capital Markets Authorisation at the Financial Services Regulatory Authority, and Jesus Peña Garcia Blockchain and Cryptocurrencies Leader at Deloitte, and Nasir Zubairi, CEO of the LHoFT.
Missed out on attending this year’s conference? Watch the keynotes speeches in full here.
A brave new world of digital assets
We are currently experiencing an evolution and revolution in the way in which assets are represented.
Digital assets can be represented in multiple ways including tokens, distributed ledger technology (DLT) and cryptography. The transition to these new representations results in a number of benefits, predominantly the increase in transparency, security and proof of ownership. For example, in today’s asset management industry, although you may be able to trade stock digitally, there are many actions before and after purchase which are manual, cumbersome, and inefficient. The current system is built on friction. The promise of these new digital assets is that the value chain will be rearchitected leading to increased levels of automation and transparency, therefore creating a future in which asset management is radically different from the world we know today.
Taking a step back, global asset markets are thriving. The global collectables market is worth c.$400bn, the global art market c.$50bn, the global gaming c.$170bn, and the global crypto market worth c.$2tn. All these markets trade in assets and therefore the way in which these assets are issued will be fundamentally transformed over the coming years. As a result, investors will not only have to acknowledge, but truly understand the emergence of new asset classes and re-familairise themselves with how they interact with each asset class. And while these all seem like new concepts and are even considered fads (e.g., NFTs), the traditional asset markets are indeed next in line. Real estate, gold, and stocks add up to hundreds of trillions of dollars, just across those three asset classes alone. The transformation that is already underway for the collectables and gaming market is set to disrupt both new and old markets in the coming years. Fund services, administration, stock issuance, and trading are worth trillions of dollars more than the “new” crypto markets (although Bitcoin did recently surpass all banks to hold the largest market cap at over $1,077bn). These markets will all need to be reimagined within the distributed ledger and blockchain technology creating massive opportunities and transformation.
Yet, many are skeptical of the ‘crypto bubble’ due to the number of scams and cases of fraud reported. If we look back to the dot-com boom, we can identify a pattern whereby increased innovation often leads to an increased concentration of bad actors attempting to take advantage of the path of least resistance. However, the survivors of the dot-com boom– including tech giants, social media, and e-commerce – arguably now rule our day-to-day lives and appear commonplace. As digital asset innovation matures, interaction with digital assets will become embedded in our lives much the same way that the internet has become indispensable.
The transformation of assets has already begun. Characterised by the rise of new digital asset classes and a reduced reliance on centralising agents, the way in which we understand the end-to-end asset management value chain today will be fundamentally different tomorrow. Digital assets will be the new frontier and the opportunities are expansive.
If you would like to read more on our Capital Markets and Asset Management views see here.
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