Digital identifiers to help the crypto market go mainstream

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LONDON (Reuters) – Tags to identify bitcoin, ethereum and other crypto assets will be launched in September in the latest sign of how the fast-growing, unregulated market is adopting the characteristics of mainstream investing .

The ability to monitor cryptocurrencies has become a major concern for regulators as the booming market, which hit a record $ 2,000 billion capitalization in April, experienced wild volatility and warnings from the bank. central that investors could lose their shirts.

Individual stocks and derivatives are already assigned a unique identification number to enable regulators and market participants to identify, track and quantify trading risks.

New digital token identifiers or DTIs will be registered with the DTI Foundation, a nonprofit unit of Etrading Software, a financial technology company that provides market infrastructure.

As the crypto asset industry grows, regulators and the market will need credentials to better track it, Sassan Danesh, managing partner of Etrading Software, told Reuters.

DTIs will create a bridge between traditional titles and the new tokenized world, using standards from the global International Organization for Standardization (ISO) which are expected to be finalized by the end of September.

At that time, the DTI ledger will officially issue identifiers for the top 100 crypto assets and tokens that make up over 80% of the current crypto market and include bitcoin, ethereum, Dogecoin and Ripple, Danesh said.

The identifiers will also make it easier to compare the exchanges offering the best prices for specific crypto assets, he added.

ISO identifiers are already used to report securities and derivative transactions to regulators to detect market abuse and risk accumulation, and Danesh expects DTIs to lead to a similar requirement for crypto transactions.

We absolutely see that there will be a regulatory mandate for the reporting of digital assets and it depends solely on the size of the digital market, which cannot be ignored by regulators now, Danesh said.

Given the time needed to integrate DTI into markets, the end of 2023 would likely be the first practical date for the introduction of mandatory reporting, he added.

The IT systems of large investors already reference ISO-based identifiers and adding DTI would not mean any major recalibration, making it easier to add digital assets.

Financial institutions, when looking to add digital assets to the reach of the asset classes they are willing to trade, the compliance officer does not want to come up with entirely new policies, Danesh said.

This is where the DTI fits in, which is part of the same family of ISO standards.

Reporting by Huw Jones; edited by Carmel Crimmins

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