Nicolas Steiner, Director, Strategy and Innovation, Invesco.

The emergence of digital asset management

Investing in digital assets is becoming the next financial paradigm as blockchain technology is changing the way we manage money and invest.

Meanwhile digital assets are an emerging asset class that addresses market inefficiencies and presents considerable opportunities enabling unique investment strategies, from pure alpha to alternative income streams coupled with high growth potential.

Much of traditional finance is looking to connect investors with meaningful opportunities in the digital asset space with institutional-grade investment funds and discretionary portfolios.

In this context, the Asset management industry is partnering with market leaders to build investment solutions that make financial sense to our clients.

“The industry is working with data-driven companies creating investment products.”

Starting with an in-depth understanding of clients’ needs and requirements, wrapped in an institutional-grade product.

The industry is working with data-driven companies, creating investment products and fostering innovation with a combination of systematic data analysis and human experience.

There is a recognised need for senior professionals with significant experience in investment management, trading, quantitative research, strategy and product development from leading asset managers, to work alongside tech entrepreneurs who have a deep expertise in digital assets.

The goal is to be relevant and part of the value chain in the coming technology bridges linking the world of traditional finance and tokenised assets, in a regulated manner.

Leveraging fintech ecosystems:

Big ideas coming from fintech ecosystems can be abstract and disconnected from the realities of running a business, especially in the digital asset space.

Therefore, we need to anticipate actions triggered by market signals coming from fintech ecosystems embracing regulatory changes.

In this context, Invesco has been working with technology incubators such as Engage in Atlanta or Level39 in London.

“We need to anticipate actions triggered by market signals coming from fintech ecosystems embracing regulatory changes.”

Links with academia is also a priority to stay connected to the latest research. For several years, Invesco has been partnering with the Cambridge Centre of Alternative Finance (CCAF).

The CCAF recently launched a platform informing evidence-based decision-making by firms, investors, regulators and policymakers globally.

The platform embeds the widely published Cambridge Bitcoin Electricity Consumption Index (CBECI), which explores the scale and implications of the Bitcoin network’s electricity consumption, while providing an interactive map to track the geographic distribution of the network’s total hash rate over time.

Invesco activity in asset tokenisation

Invesco, through their Technology Strategy & Innovation have been exploring the area of Digital Assets and Tokenisation through a number of Proof of Concepts (POC) and participation within industry consortiums since 2017.

Some specific examples include the tokenisation of a real estate product, which enabled the exploration of the various key business processes for a controlled internal audience.

“Asset Tokenisation has the potential to fundamentally disrupt the existing product delivery mechanisms and ecosystem.”

Participation in the PYCTOR consortium in partnership with a number of key organisations exploring key aspects of the digital asset custody model was undertaken as part of the FCA’s innovation sandbox.

“Asset Tokenisation has the potential to fundamentally disrupt the existing product delivery mechanisms and ecosystems, our initial proof of concept activity in this space evidenced significant potential efficiencies and the ability to democratise the availability of assets that are currently inaccessible to retail investors,” says David Reed, Director of Strategy & Innovation.

“The stance of Regulators in this area will have a significant impact on the speed of uptake, having a detailed understanding of how their position is evolving, and the differing positions by region is instrumental to us prioritising our activity”

 

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