$867 billion in derivatives, debt markets, and wealth management would be disrupted by blockchain


According to a World Economic Forum (WEF) study, blockchain technology can disrupt an $867 trillion sector. The incorporation of blockchain in derivatives, debt markets, asset management, securitized goods, and other areas was examined in the paper.

The 100-page study, titled “Digital Assets, Distributed Ledger Technology, and the Future of Capital Markets,” aimed to provide policymakers, regulators, and executives with information on emerging DLT use cases in capital markets.

“DLT is beginning to reshape capital markets, but the future is uncertain. Market forces, supported by regulatory and technical developments, are pushing participants in capital markets to digitize and consider the use of distributed ledger technology (DLT).”

the report stated.

Some tailwinds, such as an increasing interest in digital assets among retail and institutional investors, have aided the incorporation of DLT in capital markets in recent years. DLT is also gaining regulatory acceptance in some jurisdictions. There have also been many technological advancements that have resulted in platform restructuring and maturation, which has attracted investors.

According to the WEF study, one of the areas where DLT can significantly impact is the stock market. Globally, listed equities have a market capitalization of over $95 trillion. Replatforming existing post-trade infrastructure, introducing digital networks that cover the entire securities life cycle, and the issuance of equity tokens on the blockchain are some of the emerging DLT use cases in this field.

In debt markets, blockchain can disrupt the $106 trillion bonds outstanding business, according to the World Economic Forum. Market participants may use blockchain technology to build digital bond issuance systems, distributed order books for bond trading, and ‘stand-alone’ trading platforms.

Market participants can use blockchain technology to build ‘stand-alone’ blockchain bond issuance platforms, provide distributed order books for bond trading, and develop platforms for digital bond issuance.

According to the World Economic Forum, the derivatives industry is the most likely to be disrupted by blockchain technology. This industry is estimated to be worth $560 trillion. Platforms for OTC derivatives and platforms for managing collateral for cleared derivatives and exchange-traded derivatives can be built using DLT.

The study also examined the roadblocks to blockchain adoption. Many corporations have a low-risk appetite due to a lack of business cases and leadership buy-in, regulatory instability, and regulatory uncertainty.

The research was carried out by the World Economic Forum in collaboration with the Boston Consulting Group. BCG managing director Kaj Burchardi commented on the article, saying,

“Distributed ledger technology has come of age as it begins to enhance efficiencies, reduce operating costs and create new business models in capital markets, but the use cases and solutions are respective to each asset class. For capital markets to unilaterally adopt DLT, they will require cross-institutional alignment to realize the game-changing market opportunities it can offer.”


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