Digital assets have the potential to shape a new era of responsible and inclusive finance. The once-debated value of underlying technology is now evident, thanks to experiments unveiled at the Singapore FinTech Festival 2023 (SFF2023). The path forward is characterized by a multiplicity of solutions and possibilities, as the industry has developed multiple forms of money, many tokenization products, and a wide array of possible network solutions.

The challenge lies in achieving convergence across these multiple pathways. By convening financial services executives, policymakers, and technologists, SFF2023 initiated discussions on potential solutions and fostered alignment regarding the critical challenges ahead.

The many futures of digital money

Money today exists in many forms. The possibilities have only increased with digital money, with the new options including central bank digital currencies (CBDCs), stablecoins, and tokenized deposits. The success of digital assets depends on a digitally native form of money that enables the payment, clearing, and settlement of digital assets on the same network. While conference participants debated which forms of money are most likely to scale and compete, most agreed on the likely coexistence of its many forms. This means that we need continued work on both achieving interoperability across the various forms of money, both new and old, and harmonizing regulatory frameworks to ensure financial stability. 

Growing momentum in tokenization

Tokenization represents the next stage of evolution in finance. By combining recordkeeping and the transfer of value, the process of tokenization allows multiple assets to be exchanged without intermediaries. In the long run, this could substantively transform the financial system, but success depends on providing valuable and tangible use cases. SFF2023 participants showcased a diversity of experiments, including tokenization of money market funds and asset-backed securities, native issuance of bonds, and leveraging tokenization for portfolio construction. Tokenization can enjoy continued momentum with further progress on regulatory clarity, and by focusing on adoption.

Towards connectivity across networks

A central theme at SFF2023 was the critical importance of connectivity, both across the diverse set of emerging blockchain networks, and between these new networks and existing financial systems. Without interoperability, the promise of an integrated global financial ecosystem cannot be achieved. SFF2023 participants discussed emerging efforts at the global level, as well as technical solutions. Achieving interoperability also requires harmonization of policy and regulatory efforts. This quest underscores the necessity of collaboration between stakeholders, including regulators, technologists, and financial institutions.

Innovating for real use cases and inclusion

SFF2023 participants showcased how digital assets can address long-standing challenges in accessibility and inclusivity. Digital assets have proven their value in crisis situations, providing reliable alternatives when traditional financial systems have faltered. Continued progress in expanding access depends on user-centric solutions that simplify blockchain technology for everyday users. Advances also depend on further education, and direct collaboration with end users to provide useful financial products and services.

Forging a path forward in digital finance

Building a shared future across the multiple possible pathways depends on collaboration between the public and private sectors. Policymakers are needed to not only establish adaptable regulatory frameworks that combine innovation and safety, but also help coordinate issues of governance, interoperability, and privacy. The private sector plays a pivotal role in driving technological advancements and discovering practical applications of digital assets in line with consumer and policy concerns, so as to realize the broader societal benefits of digital finance. Together, both sectors can ensure an innovative, secure, and equitable digital financial ecosystem.

This joint report with Elevandi reflects on the digital assets discussions, key trends, and uses cases discussed at SFF2023. 

Additional contributors: Ugur Koyluoglu, global head of digital assets; and David Folsom, senior analyst.