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Unregulated digital exchanges as bottleneck
Journal of Digital Banking,
6
(3),
262-269
(2021)
Abstract
Since the creation of Bitcoin in 2009, digital exchanges have demonstrated that global, 24/7 and disintermediated trading is possible. By trading digital currencies, they have grown to a size impossible to ignore. To allow digital exchanges to enter the multitrillion market of securities trading and business, technology and regulators need to work hand in hand. Together, they are in a position to solve the challenges of a steep learning curve and build an efficient, convenient and, most importantly, trustable environment that can protect investors. Regulators face the challenge of channelling the path but are potentially also among the biggest beneficiaries of the inevitable transition from traditional stock exchanges to digital asset exchanges, since compliance may be ensured by design. While ensuring personal data protection and jurisdiction particularities, global standardisation and distributed ledger technology (DLT) can effectively forestall trading errors and market abuse instead of leaving them to be discovered. To generate the necessary trust for market participants to adopt, digital exchanges will have to be regulated, licensed and supervised in the same way that traditional stock exchanges are today, while safeguarding and leveraging the technological benefits that DLT carry.
Keywords: finance; exchanges; cryptocurrencies; cryptofinance; Blockchain; DLT
The full article is available to subscribers to the journal.
Author's Biography
Mattia L. Rattaggi is Managing Director, Head of Regulatory Affairs and Governance Reporting at UBS Group Internal Audit. Previous positions include Head of Group Regulatory Relations, Senior Compliance Officer and Senior Risk Officer at UBS, Head of ALM at Zurcher Kantonalbank and senior economist at the Swiss Bankers Association. Mattia carried out postdoctoral academic research at Cambridge University (UK) and holds a PhD from the University of Fribourg (Switzerland).
Luca Schenk is a Financial Markets, M&A and Digital Asset Expert with more than 25 years of international experience. He is an M&A, IPO and digital asset adviser and was previously CEO of BX Swiss, a Swiss-regulated stock exchange. Luca has contributed to diverse financial market regulatory bodies. He is an adviser and active board member in the financial, digital asset and renewable energy industries. He graduated in business administration at Bocconi University, Milan.
