taxonomy & existing risk reporting
Understanding where products fit into global risk reporting and structures. How products are classified and the additional risks that these products create above traditional assets
SSI: Self-Sovereign Identity
Identity is one of the hardest risks to monitor. SSI centres the control of information around the user. It safeguards privacy and gives individuals greater control over what information they share
security
Security and the safe storage of Digital Assets require Cold Storage (Offline) and the ability to move Assets securely between counterparties. Since no intermediaries are involved with the transfer of digital assets all transactions are final and cannot be reversed on some blockchains. Properly securing digital assets, is typically viewed as the biggest risk that companies must address
compliance & regulation
KYT, KYC, AML, CTF
One of the advantages of blockchains is that they are immutable, and bad actors leave a history trail of transactions. These can be known in advance and monitored through time
fungibility
It is imperative that Digital Assets are fungible with traditional Assets. For example, is a US Treasury Bill the same as a Digital Coin or Token based on a US Treasury Bill? In this example, if you have to wait 2 or 3 days to access the Digital Treasury Bills, these products are NOT comparable as the immediate liquidity access is NOT inherent in the Digital equivalent.
Access is the key (pun intended)
accounting and capital requirements
The accounting for digital assets, such as Bitcoin and
Ethereum, are typically accounted for as indefinite-lived intangible
assets. This means the companies carrying these assets on their
balance sheet must carry them at cost and are subject to stringent capital requirements prohibiting FI's currently from developing long-term strategies in Digital Assets. FASB and the BIS have recently taken up a
project to address these issues