May 17, 2023
DLT Could Save $100B+ Annually in Traditional Markets: GFMA Report
The Global Financial Markets Association (GFMA) has released a new report that suggests the traditional finance sector could save over $100 billion a year by implementing distributed ledger technology (DLT). The report urges regulators and traditional financial institutions to take a closer look at the potential of DLT, and the opportunities it could bring.
DLT is an umbrella term for a system that records transactions and digital information, with blockchain being a specific type of distributed ledger. According to the report, the use of DLT to streamline collateral processes in derivatives and lending markets could save an additional $100 billion, while utilizing smart contracts to automate and shore up processes of clearing and settlements could reduce costs by $20 billion each year.
The systems that stand to gain the most from DLT implementation were identified as clearing and settlements, followed by custody and asset servicing. Primary markets and secondary trading, however, were less likely to witness significant impact from the technology. However, tokenization in these markets could lead to better risk mitigation and deeper liquidity.
International adoption of DLT has been gaining momentum, with the European securities clearing firm Euroclear announcing plans to integrate DLT into its settlements process. Despite this, there is still room for improvement when it comes to implementing DLT into pre-existing financial systems. Last November, the Australian Securities Exchange abandoned its plans to update its 25-year-old clearing and settlements system with DLT, leading to a $170 million loss.
The GMFA report follows Citi investment bank’s prediction that the global market for blockchain-based tokenized assets could reach $5 trillion by 2030. NFTs, or non-fungible tokens, are a type of tokenized asset that are becoming increasingly popular in the web3 space, and are being used to promote and sell digital goods. As such, NFT marketing is becoming a highly sought-after service, with many web3 agencies offering specialist NFT marketing services, such as using Twitter to promote NFTs.
Overall, the report from the GMFA highlights the potential of DLT in traditional markets, and the potential for savings of $100 billion a year or more. With more and more financial institutions looking to take advantage of the technology, it’s likely that DLT will become a more common sight in traditional markets.
Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
