Blockchain: the transformative answer to handling alternatives?

Alternative Investment operational processes are directly at odds with the industry’s trajectory for digital transformation and operational efficiency. Laden with challenges, lack of standardization, paper-based manual processes, scalability constraints and aged legacy systems, it is time, in our digital age of advancing technology, to re-imagine the value chain and address these operational pain points.

Driven by growing interest in alternatives assets, investor appetites for transparency into those assets, the industry’s need for capital, and pressure on operations to improve margins, an urgency to address these issues has opened the door for disruptive technologies to provide a solution, particularly blockchain. Blockchain purports instantaneous settlement, access to funds intermediaries, and notably, the digitization, or tokenization, of real assets: equities, debt, and alternatives. Debt and equity markets have identified opportunities for greater automation, in large part due to incentives and penalties created by more extensive regulation. This leaves the alternatives market the most to gain from blockchain solutions and the tokenization of assets. As interest in tokenization intensifies, so does optimism that blockchain will be the transformative answer to processing and handling alternative assets. It is a natural fit that digital securities native to the blockchain would be handled operationally on the blockchain. But the industry has not fully transitioned on chain, nor is it certain it will.

In this unknown interim, the industry must first solve whether blockchain can transition the handling of physical, non-native alternatives, on a digital basis. Will those assets benefit from what blockchain provides: instantaneous, trustless data sharing? Or is the solution diluted to a glorified workflow tool? If a workflow tool, is it the most compelling of workflows or is it a necessary step in bridging the physical and digital world?

Sia is a next-generation consulting firm dedicated to delivering superior value and tangible results to clients navigating the digital revolution. We work with a diverse range of clients, including large financial institutions across the US, Switzerland, Singapore, Hong Kong, the UK, and the Middle East. Our hybrid model combines Blockchain and Business expertise to rapidly implement blockchain solutions, strategy, research, operational optimization, business transformation, development, security, architectural design, and regulatory management. Our team covers a broad spectrum of blockchain technology including Ethereum and its rollups, EVM networks like Polygon, Bitcoin and the Lightning Network, Hyperledger, R3-Corda, Quorum, and more.