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Blockchain technology is capitalizing on rising investment and interest to transform capital markets. As the demand for alternative asset management makes headlines, investors of all shapes and sizes are diversifying their portfolios. Enterprises have begun to tokenize their assets to gain access to new sources of capital. For instance, HighCastle, the largest blockchain-based investment marketplace is looking forward to filling the space between investors and founders by tokenizing securities that give way for the smooth trading of global alternative аssеts. Majority of the business leaders believe that blockchain is going to have a tremendous impact on the capital market infrastructure. As blockchain technology has the ability to radically change the way companies raise capital, the majority of the business leaders believe that it is going to have a tremendous impact on the capital market infrastructure. It also has the potential to organize financial transaction data, making it more transparent and efficient.
Apart from giving access to a shared view of authorized data, the blockchain technology brings in many other benefits across the board, from asset servicing and accounting to allocations and administration.
Here are the several other ways that blockchain can prove beneficial to capital markets:
Swift Validation
With the ability to decentralize the transaction process, blockchain technology offers transparent and automated verification of holdings, which helps in faster and more secure trading.
Cost Reduction
Automating securities issuance processes on the blockchain eliminates the need for the central clearing of real-time transactions and reduces operational complexity.
The complete Access to Markets and Trading
Blockchain offers an unparalleled opportunity for users to access securities trading anytime from anywhere without having to close the market.
Liquidity and Market Depth
Private securities are basically illiquid assets, meaning that individuals and institutions investing through crowdfunding platforms don’t have an organized secondary market allowing them to cash out an investment.
With blockchain technology and the proper legal structuring of tradable security tokens, this market can finally be created. This liquidity greatly enhances the attractiveness of investing in alternative assets.
Automated Compliance
Integrating with external databases, blockchain enables the automation of AML checks and KYC due diligence. By using an automated criteria-based decision-making protocol, blockchain allows users to analyze clients’ profiles quickly and efficiently.
Transparency of Returns
As payment instructions are automatically generated in the cash ledger based on the obligations computed by the smart contract at maturity there is no way for fraud. This elevates trust and transparency in dividends and interest payments.
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