1、DIGITAL ASSETS AND WEB3Insights from the Singapore FinTech Festival 2022Contents|Digital Assets and Web3 Oliver WymanBThe Singapore FinTech Festival(SFF),the worlds largest FinTech festival and global platform for the FinTech community,is organised by the Monetary Authority of Singapore(MAS)and Elev

2、andi,in partnership with Constellar and in collaboration with The Association of Banks in Singapore.SFF brings together the global FinTech community to engage,connect,and collaborate on issues relating to the development of financial services,public policy,and technology.For more information,please

3、visit www.fintechfestival.sgThe theme of the Singapore FinTech Festival 2022(SFF2022)was Building Resilient Business Models amid Volatility and Change.Key stakeholders comprising government leaders,regulators,financial services leaders,entrepreneurs,investors,digital asset firms,and technology leade

4、rs explored this theme across three key questions:VIABLEHow are organisations building and redefining business models that can be more resilient to volatile market conditions?RESPONSIBLEHow are organisations balancing corporate responsibility and profitability in order to achieve greater stakeholder

5、 satisfaction and engagement?INCLUSIVEHow are organisations designing inclusive business models that cater to the needs of the unbanked and underbanked?Oliver Wyman hosted the Digital Assets and Web3 Knowledge Plenary,roundtable sessions at the Elevandi Insights Forum,and was a sponsor of SFF2022.Co

6、ntents|Digital Assets and Web3Elevandi is set up by the Monetary Authority of Singapore to foster an open dialogue between the public and private sectors to advance FinTech in the digital economy.Elevandi works closely with governments,founders,investors,and corporate leaders to drive collaboration,

7、education,and new sources of value at the industry and national levels.Elevandis initiatives have convened over 300,000 people to drive the growth of FinTech through events,closed-door roundtables,investor programmes,educational initiatives,and research.Its flagship product is the Singapore FinTech

8、Festival alongside fast-rising platforms,including the World FinTech Festival,Point Zero Forum,and the recently launched Elevandi Insights Forum.For more information,please visit www.elevandi.ioOliver Wyman is a global leader in management consulting.With offices in more than 70 cities across 30 cou

9、ntries,Oliver Wyman combines deep industry knowledge with specialised expertise in strategy,operations,risk management,and organisation transformation.The firm has more than 6,000 professionals around the world who work with clients to optimise their business,improve their operations,and risk profil

10、e,and accelerate their organisational performance to seize the most attractive opportunities.Oliver Wyman is a business of Marsh McLennan.Oliver Wymans Digital Asset team works with disrupters,incumbents,investors,and public policy makers to navigate the rapidly evolving digital assets landscape,ass

11、isting clients to redefine existing business models and create new ones,operate in a complex and uncertain regulatory environment,evaluate risks,and gain a deep understanding of the new ecosystem.For more information,please visit Monetary Authority of Singapore(MAS)is Singapores central bank and int

12、egrated financial regulator.As a central bank,MAS promotes sustained,non-inflationary economic growth through the conduct of monetary policy and close macroeconomic surveillance and analysis.It manages Singapores exchange rate,official foreign reserves,and liquidity in the banking sector.As an integ

13、rated financial supervisor,MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore banks,insurers,capital market intermediaries,financial advisors and financial market infrastructures.It is also responsible for well-functioning financ

14、ial markets,sound conduct,and investor education.MAS also works with the financial industry to promote Singapore as a dynamic international financial centre.It facilitates the development of infrastructures,adoption of technology,and upgrading of skills in the financial industry.For more information

15、,please visit www.mas.gov.sg.Contents|Digital Assets and Web3FOREWORDSingapore FinTech Festival(SFF2022)was a celebration of being together in person again,bringing together an energised ecosystem of global visionaries,founders,and leaders from all facets of the industry.As the worlds largest FinTec

16、h festival,we had 62,000 participants from 115 countries,including 850 speakers and 295 government,policy makers,and regulator organisations discussing the most pertinent issues in the world of financial services today.Digital assets and Web3 were a core theme of SFF2022.We saw 19 digital assets and

17、 Web3 plenary sessions covering topics as diverse as building resilient Web3 companies,unlocking TradFi with DeFi,and programmable money in Singapore.In addition,there were multiple meet-ups,networking events,exhibition booths,and round-table sessions in the Elevandi Insights Forum,exploring aspects

18、 of the ecosystem and the overarching theme.Speakers and panellists ranged from FinTech CEOs to leaders of financial institutions and regulators,and brought regional and global perspectives.Attendees were cognisant of the turbulent macroeconomic climate ahead,rising interest rates,and the crypto win

19、ter,which set the scene for pragmatic yet optimistic discussions around how we as an industry can tackle the challenges and reap the rewards offered by digital assets and Web3.We saw discussion invigorated by the prospects and opportunities presented by the underlying technology of digital assets an

20、d Web3.As the industry continues to mature with new use cases,applications,and business models,both FinTechs and large financial institutions have a unique range of opportunities ahead of them and have the potential to provide increased access to banking products for the underbanked,as well as incre

21、ased efficiency of transactions,transparency,and support for the underprivileged through programmable subsidies.During the week of SFF2022,the Monetary Authority of Singapore(MAS)announced projects underway with the industry to explore the opportunities and foster greater FinTech innovation.Through

22、Project Ubin+1,MAS looks to collaborate with international partners to explore the cross-border exchange and settlement of foreign currency transactions using wholesale central bank digital currencies(wCBDC).MAS Project Orchid2 introduces the concept of purpose bound money(PBM)which enables the send

23、er to define specific purpose for which recipients could use funds for by exploring use cases such as learning grants and government disbursement in Singapore.Finally,Project Guardian3 tests the feasibility of applications in asset tokenisation and decentralised finance(DeFi)while managing risks to

24、financial stability and integrity.Importantly,Project Guardian explores the role of regulated 1 Project Ubin+2 Project Orchid3 Project GuardianContents|Digital Assets and Web3institutions to act as trust anchors to issue and verify identity for transacting parties and validated the importance of hav

25、ing agreed technical business and token standards for interoperability.This report reflects on the digital asset and Web3 discussions,key trends,use cases discussed at SFF2022,and the factors contributing to building resilient companies in the ecosystem.We look forward to welcoming you all again at

26、an even more significant and impactful SFF in 2023.Sopnendu MohantyChief FinTech Officer,MAS,and Chairman of the Board,ElevandiJames GordonPartner and Asia Pacific Digital Assets Lead,Oliver WymanCONTENTSExecutive Summary 1Digital Assets and Web3 4Institutional Adoption 13Outlook 18Acknowledgements

27、23 Oliver Wyman1Contents|Digital Assets and Web3EXECUTIVE SUMMARYThis report provides reflections on the digital assets and Web3 discussions at the Singapore FinTech Festival(SFF2022).SFF2022s theme of Building Resilient Business Models amid Volatility and Change was incredibly pertinent to the digi

28、tal assets ecosystem,which has experienced both the macroeconomic pressures felt in traditional markets,and a series of large-scale idiosyncratic challenges that continue to rock the industry.Digital assets and Web3 were a core knowledge pillar of SFF2022,and a pervasive topic throughout the Festiva

29、l.This report explores what it takes to ensure business models and the ecosystem remain viable,responsible,and inclusive,how digital assets facilitate the creation of new or more efficient products and services,how we can accelerate institutional adoption,and how we manage risks and regulate the eco

30、system.Whilst discussions and topics varied considerably over the course of the Festival,this report brings together common themes,perspectives,festival optimism,and points of contention.It provides a snapshot of industry sentiment across SFF2022 participants and focuses on the opportunities,challen

31、ges,and risks of digital assets and Web3 in financial services.New functionality that promises financial inclusion,operational and cost efficiencies,and novel products and servicesDigital assets cover a wide and varied set of protocols,tokens,networks,and structures,and support products and services

32、 that are sometimes skeuomorphic to traditional finance and sometimes fundamentally different to those found in traditional markets.Cryptocurrencies,the recipients of substantial speculative attention over the last few years,represent just a fraction of the ecosystem.The discussions at SFF2022 explo

33、red the full range of innovation emerging from digital assets.The innovation provided by digital assets has the potential to change how financial services work.Early distributed ledgers offered immutable and distributed transaction records and changed the way multi-party transactions could occur,pro

34、mising faster and cheaper ways for settlement.But,it is the programmability and composability that these distributed ledgers provide that opens up the opportunity for innovative new products and services.The ability to tokenise almost anything,and have applications interact with one another autonomo

35、usly via these systems,has the potential to enable the development of whole new ecosystems.This provides great opportunities but also needs careful design,management,and regulation.Oliver Wyman2Contents|Digital Assets and Web3Accelerating institutional adoption4 Project Guardian5 Project Orchid6 Pro

36、ject Ubin+Traditional financial institutions,and super-regional and global players are increasingly establishing their role in the digital asset ecosystem,with leading firms participating in cross-jurisdiction experiments with central banks,regulators,and peers.They are launching products and servic

37、es that leverage digital asset technology and provide sophisticated digital asset services to institutional investors.Whilst products and services vary widely,some common themes are emerging across institutions.For example,cross-border payments and programmable money promise efficiency and cost bene

38、fits and drive financial inclusion.Similarly,tokenisation has transformative potential,allowing financial and real economy assets to be fractionalised and exchanged securely,atomically,and 24/7,without the need for intermediaries.Finally,institutional-grade custody provides a fundamental building bl

39、ock for the deployment and use of institutional offerings.Several notable digital asset and CBDC experiments as part of new project launches were announced at SFF2022.These include Project Guardian4,the exchange of tokenised assets on a public blockchain;Project Orchid5,programmable money experiment

40、s with Purpose Bound Money(PBM)to enhance the transparency of transfers and reduce the administrative costs of distribution;and Project Ubin+6,using wholesale CBDCs to enhance cross-border Foreign Exchange(FX)by exploring atomic settlement,allowing for simultaneous exchange of two or more digital cu

41、rrencies in real-time to improve efficiency and reducing risks.Sustained pressure on ecosystem participants As the ecosystem navigates the current pressures,developing resilient business models and building for the long-term is critical.For FinTechs,a renewed focus on expending resources on must-win

42、 products and markets,building propositions with clear utility value to customers,and having profitable business models as opposed to a singular focus on customer acquisition or top-line growth(which was often an afterthought when a balance sheet could be topped up with VC funding or a token pre-sal

43、e)were identified to be key objectives.For institutional players,the maturity of the technology,the available talent in the market as crypto-natives shed staff to manage their cost-base,and the increasing regulatory clarity provide an opportunity to speed up innovation and serve their clients in new

44、 and more efficient ways.Regulators must continue to find the balance between safety and innovation,and use experiments to explore the risks and implications of new rules or adjustments to existing frameworks as they set policies for the ecosystem.Oliver Wyman3Contents|Digital Assets and Web3Despite

45、 the wide-ranging and ongoing pressure facing ecosystem participants,the downturn could mark an inflection point for the ecosystem.We could see a shift from speculative investment to a focus on infrastructure and utility,from retail heavy consumption of crypto assets to more institutional adoption,a

46、nd from fragmented platforms to open,interoperable systems.How this evolution unfolds,and its influence on traditional finance remains unclear,but FinTechs,institutions,and regulators must be involved and contributing to that evolution,or risk being left behind.Oliver Wyman4Contents|Digital Assets a

47、nd Web3DIGITAL ASSETS AND WEB3The digital assets and Web3 theme was a core theme of SFF2022,both within dedicated plenary sessions and across a wide range of discussions around business models and opportunities.Our speakers were energised by the promise of increased financial inclusion,cost and effi

48、ciency benefits that would flow through to consumers,the economic benefit of reduced friction for cross-border payments,and the possibility for new products and services enabled by the programmability,composability,and efficiency of digital assets.Perhaps most exciting was the extent to which crypto

49、-natives,institutions,and regulators were coming together and looking to collaborate to navigate the risks inherent in the ecosystem,establish the guardrails needed to stabilise the ecosystem without stifling innovation,and realise the potential benefits to ecosystem participants and the financial s

50、ervices industry.The recent and ongoing market turmoil was well acknowledged at SFF2022,but many made the distinction amongst business,reduced investor enthusiasm and cryptocurrency valuations,and the infrastructure and opportunities arising in the wider digital asset ecosystem.The speakers touched

51、on the poly-crises experienced over the past six months and the contagion that spread as valuations collapsed,along with the liquidity and solvency challenges striking major Web3 players.The discussions turned to what it takes for participants to remain viable and thrive under these conditions.Furth

52、ermore,there was discussion on the potential benefit of cleaning out the unsustainable business models,discouraging excessively risky behaviours,and exposing vulnerabilities.Together,these actions could accelerate the maturing of the industry,by helping regulatory attention focus on where it is most

53、 needed and promote infrastructure development rather than speculative investing.Many expressed caution that there would be further internal and external challenges facing the ecosystem,and participants should expect further volatility and pressures.However,with increasing institutional adoption,reg

54、ulatory clarity,and technological progress,the long-term role of digital assets and Web3 in the financial services industry was confirmed to be both significant and potentially revolutionary in terms of its impact.Oliver Wyman5Contents|Digital Assets and Web3PRIMERWhilst definitions and visions diff

55、er,many describe Web3 as an evolution of the Web where ownership and control are distributed amongst users,and token-based incentives and economics enable trustless interactions.This represents an evolution from Web1,which was characterised by static,one-way information sharing and users were predom

56、inantly consumers of content,and Web2,comprised of user-centric platforms facilitating a wide range of two-way interactions powered by user-created content.In Web1 you could read content,in Web2 you could read and write content,in Web3 you can read,write and own.Dante Disparte,Chief Strategy Officer

57、 and Head of Global Policy,CircleExhibit 1:The three phases of internet evolutionWEB1Internet of Information(1995-2003)WEB2Internet of Commerce and Sharing(2003-2018)WEB3Decentralised Internet(2018-Present)Participation modelOne-way information sharing users are consumersBroadcasters and publishersR

58、ead-only static/image-based searchesClosed-loop,user-generated content,and participativeSocial media and profilesCentralised with no portabilityOpen-loop metaverses,shared dataDecentralised web/controlOwned by users(data,identity,privacy)Personalisation,engagementDelivery modelWebsites,portals,and d

59、irectoriesPowered by servers,walled gardensBrowsersPlatforms,SaaSCredit cards,app store,marketplacesBlockchain,DLT,dAppsWallets,transparent P2P transactionsUI and service layers,interoperabilityTokenisation/governance of tokensMonetisation modelSoftware licenses and proprietary hardwareNo commerceUs

60、er-generated/subscription contentPay-to-play/in-game purchasesReferrals,interactive advertising,pay per clickConsumer-owned media,peer-to-peer tradingIn-game economies,play to earnMinting,staking,lendingSource:Oliver Wyman analysis Oliver Wyman6Contents|Digital Assets and Web3Underpinning Web3 are d

61、igital assets represented by uniquely identifiable digital tokens that are created,stored,and transferred on a blockchain.Digital assets provide for the ownership of items of value,which can range from cryptocurrencies to digital media rights,to the digital representations of physical assets.Whilst

62、cryptocurrencies and non-fungible tokens(NFTs)associated with digital art have experienced headline-grabbing valuations and volatility,digital asset landscape is much wider,as summarised in exhibit 2.Exhibit 2:Digital asset token landscapeNon-fungibletokensFungibletokensTraditional instrumentsDigita

63、l instrumentsCrypto assetsand derivativesProtocol tokens,wrapped tokensand collateral,redemption tokensPhysical goodsand servicesPhysical art,gaming,venue attendance,real estate,access toa subscriptionMembershipVenue access,organisation affiliations/access,loyalty programmesCollectables and unique i

64、nstrumentsDigital art,digital rights,in-game assetsIdentityReputation,proof of contribution/participationSecuritiesNon-fungible equities,debt instrumentsShares,obligations,bonds,oil and precious metal derivatives,optionsApplication and governance tokensUtility,voting/decision rightsDigital moneyCBDC

65、s,stablecoins,tokenised deposits,programmable moneySource:Oliver Wyman analysis Oliver Wyman7Contents|Digital Assets and Web3A BRIEF HISTORYDistributed ledgers received widespread public attention with the launch of Bitcoin in 2009.Digital assets enjoyed particularly significant growth from April 20

66、19 to their peak in November 2021,driven by speculative activity,and the adoption of new use cases and maturing technology.Enormous government stimulus and quantitative easing during the COVID-19 pandemic further elevated the capital deployed by venture capital funds.According to Forbes and White St

67、ar Capital,total VC funding for Web3 companies reached US$30 billion globally and US$1.45 billion in Asia in 2021.The market value of digital assets subsequently increased from US$5 billion in 2015 to nearly US$3 trillion in 20227,as reported by Merchantmachine.On 8 November 2021,Coinbase recorded B

68、itcoins all-time high of US$68,789.The Web3 ecosystem user base also expanded exponentially,with CNBC reporting that US adult adoption rose from 1%in 2015 to approximately 13%in 2021.This mirrors the rate of early adoption of the internet,which increased from 1%in 1990 to 16%in 1996,according to the

69、 World Bank.Today,Chainalysis estimates that about 300 million people own cryptocurrency globally and 35%of those owners are in Asia.Exhibit 3:Comparison of internet and Web3 user adoptionTotal users in millionsInternet user timelineWeb3 user timeline1101001000100002020199019952000200520102015204420

70、1420192024202920342039Source:The World Bank and C7 This is perceived market value but most of these valuations are unbacked and could turn out to be much less in real world terms.Oliver Wyman8Contents|Digital Assets and Web3The market has experienced a major correction since November 2021,as rising

71、inflationary pressures,the war in Ukraine,and a change in Federal Reserve(FED)policy led to a large drop in risk appetite across the globe.The algorithmic stablecoin Terra and its sister coin Luna collapsed,as destabilising trades and a cascade of negative sentiment created a liquidity crisis that q

72、uickly became unrecoverable.The subsequent collapse and bankruptcies of several Web3 enterprises,notably Celsius,Three Arrows Capital,and Voyager,rippled through the ecosystem,and added to the consumer losses inflicted by dramatic reductions in valuations and a string of exploits that drained major

73、platforms of funds.As of February 2022,M reported that half of all bitcoin wallets were loss-making,and according to Coindesk,over 24,000 Web3 jobs were lost by November 2022.In November 2022,Cointelegraph reported the total market capitalisation for cryptocurrencies was below US$900 billion,and in

74、December 2022,B reported that Bitcoins Market Value to Realised Value(MVRV)dropped below 1.0,meaning on average each coin sold was worth less than what was paid for it.RESILIENCE SHOWN BY THE ECOSYSTEMDespite the significant market downturn and headline-grabbing crises,the ecosystem is showing resil

75、ience.The old adage“downturns are for building”appears to be playing out.As Alchemys Q3 2022 Web3 Development Report shows,weekly downloads of ethers.js and web3.js,the core libraries used by developers to build and interact with the Ethereum blockchain,have continued to grow despite the rise and fa

76、ll of Ethereums market capitalisation.Additionally,it is expected that many projects have multi-year runways,and cost pressures,primarily for developers,have started to ease.Exhibit 4:Weekly downloads of key Web3 development libraries versus Ethereums market capitalisation500,0001,250,000750,0001,50

77、0,000450350250150550250,00001,000,000Weekly downloadsweb3.jsethers.jsETHJan 2017Jan 2018Jan 2019Jan 2020Jan 2021Jan 20220ETH market cap,US$billionsSources:Alchemys Q3 2022 Web3 Development Report,npm,and coinmarketcap Oliver Wyman9Contents|Digital Assets and Web3According to Cointelegraph and Reuter

78、s,VC funding decreased during the last three quarters of 2022,yet was more than the industry attracted from 2017 to 2020 combined.Despite these declines,the number of seed deals in digital asset infrastructure continue to grow,and gaming remains the largest category(22 September 2022,Cointelegraph).

79、Mergers and acquisitions activity rose during the first half of 2022,as valuations plummeted and market synergies offered revenue diversification or lifelines8,and while this activity is unlikely to surpass 2021 volumes,it is still expected to exceed the respective volumes of 2019 and 2020 by the en

80、d of the year,according to Token Data Research(8 August 2022).We see a bifurcation in crypto-natives.There are those reliant on speculative value or traded volumes,who are at a difficult spot in their funding cycle or havent hedged their balance sheets;these firms are struggling.But,there are those

81、building infrastructure,launching projects with utility value,have raised capital,and are currently diversifying theirrevenue streams;they are benefitting.They are not focused on their next airdrop,or what their Discord followers are saying they are building with alonger-term vision.James Gordon,Par

82、tner and Asia Pacific Digital Assets Lead,Oliver WymanDIGITAL ASSET FUNCTIONALITYDigital asset functionality can be used by financial institutions to reduce friction,lower costs,and improve overall efficiency in multiple parts of the business.They have the potential to create new revenue streams and

83、 competitive advantages.Efficiencies created have the potential to flow through to consumers,improve financial inclusion,and benefit the economy.8 Source:MergerMarket,Capital IQ,Crunchbase and Pitchbook,as of June/July 2022 Oliver Wyman10Contents|Digital Assets and Web3Weve long believed that crypto

84、 is going to go through these three phases:its going to start off as purely an investment vehicle,a new asset class,then its going to become a new set of financial services,and then its going to become a set of applications that are not even financial-related at all.Brian Armstrong,CEO,CoinbaseThe u

85、nderlying blockchain technology,and its ability to both execute and store transactions in an immutable,transparent,decentralised manner have wide-ranging benefits to several operations and functionalities for financial services.Immutable,persistent,transparent ledger:Decentralised maintenance,contro

86、l,and access to data allow multiple parties to simultaneously update and reference shared information without risk of deletion or modification,greatly reducing the need for reconciliation and trust.The shared infrastructures also enable business rules and logic,such as payments and asset transfers,t

87、o be executed in a transparent manner.Programmability:Expressive programmes,known as smart contracts,enable the execution of instructions on a ledger.These smart contracts execute business,financial,and legal transactions between parties under predefined terms and conditions,for instance combining p

88、ayment instructions with the exchange of value as a single transaction,or lending against collateral.Composability:On-chain functional elements can be combined to create richer and more complex Web3 applications.Like the open-source code that powers much of the blockchain software infrastructure,pro

89、grammes on blockchains that handle value are a rich ecosystem of composable building blocks.When we look at Web3,we talk about distributed systems,open ecosystem,interoperability,we talk about programmability and composability.These are the things that allow a rich ecosystem to work together and hav

90、e sustainable economics.Jason Thompson,CEO,PartiorContents|Digital Assets and Web3 Oliver Wyman11DEEP DIVEFinTech in its Element:Water,Metal,Fire,Wood,EarthIn his address at SFF20229,Ravi Menon,Managing Director,MAS,discussed his expectations for the future of the digital asset ecosystem,and the rol

91、e he sees Singapore playing in its evolution.KEY OUTCOMES FOR THE DIGITAL ASSETS AND WEB3 ECOSYSTEMRavi noted five key outcomes he wanted to achieve through collaborative FinTech projects,linking them back to Wu Xings five fundamental elements that function as cosmic agents of change:Water,Metal,Fir

92、e,Wood,EarthReal-time,24/7 payments are increasingly common in many jurisdictions for seamless domestic transfers.However,cross-border payments remain costly,slow,opaque,and inefficient,attracting an average 6%of transfer value,according to the World Bank.Project Nexus explores an opportunity to lin

93、k countries real-time payment systems and provide a high speed,transparent,secure,low cost,and multi-lateral solution.Flowing like water:Instant remittanceProject NexusAtomic settlement is the simultaneous exchange of two linked assets in real-time.Today,settlement is often a multi-intermediary,mult

94、i-ledger,and multi-day process that attracts settlement risk and the need for large pre-funding accounts.One of the most promising ways to achieve atomic settlement is through tokenised assets which can be exchanged simultaneously on a distributed ledger,supporting cross-currency and securities tran

95、sactions.Strong like metal:Atomic settlementProject Ubin+Programmable money refers to the embedding of rules within the medium of exchange itself.These rules can include conditions on the beneficiaries and usage,and are retained even when the money is transferred.With programmable money,we can have

96、better assurance that the money reaches its intended beneficiaries and used for its intended purpose.Reshaping like fire:Programmable moneyProject Orchid9 Speech by Ravi Menon at the Singapore FinTech Festival 2022Contents|Digital Assets and Web3 Oliver Wyman12Tokenisation is the digital representat

97、ion of ownership rights over any item of value,be it digital or physical.It enables financial and real economy assets to be represented,fractionalised,and exchanged over the internet on a peer-to-peer basis securely and seamlessly without the need for intermediaries.It also facilitates Decentralised

98、 Finance,where borrowing,lending,and trading activities can be performed autonomously through smart contracts,potentially enhancing the efficiency and accessibility of financial services.Growing like wood:Tokenised assetsProject GuardianProject Greenprint seeks to reduce the cost and increase the re

99、liability of green data for environmental,social,and corporate governance(ESG)purposes.This can help mobilise capital to sustainable projects,monitor the climate commitments made,and measure the impact associated with investments.Grounded like earth:Trusted sustainability dataProject GreenprintThe f

100、ive desired outcomes instant remittance,atomic settlement,programmable money,tokenised assets,and trusted sustainability data remind us that everything we do in Finance,Technology,and FinTech must have a larger purpose.We want to expand economic opportunity,enhance social inclusion,reduce risk,and p

101、rotect our planet.Ravi Menon,Managing Director,Monetary Authority of SingaporeVISION FOR SINGAPORERavi was clear on Singapores vision to establish itself as a crypto asset hub.His message was simple:If a crypto hub is about experimenting with programmable money,yes we want to be a crypto hub.If it i

102、s about applying digital assets for use cases like atomic settlement,yes we want to be a crypto hub.If it is about tokenising real and financial assets to increase efficiency and reduce risks in financial transactions,yes we want to be a crypto hub.But if it is about trading and speculating in crypt

103、ocurrencies,that is not the kind of crypto hub we want to be.Oliver Wyman13Contents|Digital Assets and Web3INSTITUTIONAL ADOPTIONIt was clear during SFF2022 that major financial institutions are paying attention to the digital assets and Web3 ecosystem.Many are engaged in experiments with central ba

104、nks,other institutions,and crypto natives to explore the technology and better understand the risks and benefits.Furthermore,products and services are emerging that provide more sophisticated offerings for corporate and institutional participants.Senior leaders of major financial institutions recogn

105、ised the potential of digital assets to provide a sustained competitive advantage,but the technological,reputational,and regulatory risks remained front of mind.PAYMENTSDigital money enables the efficiency and transparency of monetary transactions,and comes in several forms,each with unique attribut

106、es and challenges.CBDCs,stablecoins,and tokenised deposits are emerging forms of digital money that could enable a sophisticated Web3 economy with significant scale.Digital money allows for lower-cost,safe,real-time,programmable,and more competitive payments compared to what exists today.It can enab

107、le financial inclusion,and reduces settlement risks.If we look at the addressable market for wholesale and digital tokenised assets,tokenised assets are projected at about US$16 trillion in 2030.The wholesale money market movement is colossal,trillions hundreds of trillions of dollars but theres an

108、inefficiency in that system of in excess of 100 billion dollars.Now,if we address that 100 billion dollars,thats an impact to GDP.Thats sizeable,but when you look at the size of those markets,without distributed systems,without interoperability,without an open methodology and principles,you cannot s

109、erve markets of that size.Thats why theyre inefficient today.Jason Thompson,CEO,Partior Oliver Wyman14Contents|Digital Assets and Web3Central Bank Digital Currencies10 Project MarianaCBDCs are digital money issued by a countrys central bank.According to Reuters,about 26%of the worlds central banks a

110、re already running a CBDC pilot whilst an additional 62%are experimenting in Proof of Concept stages.In the recent announcement of Project Mariana10,MAS is partnering with the central banks of France and Switzerland,and the BIS Innovation Hub,to explore the exchange and settlement of wholesale CBDCs

111、 with an automated market maker to settle foreign exchange trades in financial markets.Stablecoins Stablecoins provide an alternative mechanism for instant payments and settlement.Whilst the majority of stablecoins in circulation as of Dec 2022 are US Dollar denominated,StraitsX,a payments infrastru

112、cture provider has launched stablecoins pegged to the Singapore Dollar and Indonesian Rupiah designed to lower merchant fees and drive financial inclusion.StraitsX allows the offline acceptance and disbursement of payments via off-chain signing between the consumer wallet and merchant terminal,follo

113、wed by an on-chain verification step.We firmly believe that stablecoins are redefining the very fundamentals of the payment ecosystem.Romain Zanolo,Managing Director APAC,IDEMIA Tokenised depositsTokenised deposits are the digital representation of existing deposits held by a licensed depository ins

114、titution,such as a commercial bank,but recorded on a blockchain and transformed into a blockchain-native instrument.The functional characteristics of blockchains make new business models possible,such as intraday repos,which could revolutionise short-term funding and liquidity management.Project Gua

115、rdian has explored the feasibility of using tokenised Singapore Dollar deposits as the settlement leg of tokenised assets on a public blockchain.Oliver Wyman15Contents|Digital Assets and Web3We really believe that in the future,you will have a coexistence of different digital assets,you will have CB

116、DCs,you will have stablecoins,you will have crypto,you will have tokenised deposits,and possibly other things.Umar Farooq,CEO,Onyx by J.P MorganPROGRAMMABLE AND PURPOSE BOUND MONEYProgrammable money enhances the transparency of transfers,reduces the administrative costs of distribution,and helps in

117、the effective usage of monetary assets,with the potential to further accelerate financial inclusion.Singapore is exploring Purpose Bound Money(PBM)as part of the Project Orchid Phase 1 trials.PBM serves as a digital bearer instrument that has specific conditions enabling the monetary asset to be use

118、d only for its intended purpose,such as for government pay-outs or managing learning accounts.In practice,the holder can present their PBM to participating merchants in exchange for goods or services(a programmable payment feature)for a limited time.In some instances,the terms of the voucher scheme

119、allow it to be transferrable between people(a programmable money feature)and retain its payment conditions.Hence,a consumer could purchase a gift voucher and transfer it to another person,who may then use it at a participating merchant.Vouchers could also be issued to support government disbursement

120、 programmes,and conceptually,the holder of the voucher could redeem it without requiring the need for a bank account.Other jurisdictions have been exploring the potential of programmable money.For example,Ledger Insights reports that programmable money is being trialled for the distribution of agric

121、ulture subsidies in Brazil,and the JPM Coin has allowed corporate clients to make programmable,real-time,multi-currency payments using multi-bank shared ledgers.Oliver Wyman16Contents|Digital Assets and Web3Where you have many interested parties in settling a transaction and you need trusted infrast

122、ructure for all parties to.fulfill their conditions and requirements before the money is dispersed.I think thats where purpose bound money can go to the next level.Melvyn Low,Head of Transaction Banking,OCBC TOKENISED ASSETSTokenisation is the process of generating a digital representation of an ass

123、et that can be stored,verified,and transferred on a blockchain.The underlying asset can be digital or physical,and include tangible assets such as property,commodities,or currency,or intangibles such as licences,voting rights,or intellectual property.Through Project Guardian,MAS and the financial in

124、dustry are laying the structures and protocols that will help harness the benefits of tokenised assets and DeFi while managing their risks.Ravi Menon,Managing Director,MAS Institutions are exploring the economic potential of tokenised assets,such as the issuance of tokenised bonds,where bond ownersh

125、ip is represented by a token on a blockchain,and smart contracts are used to automatically execute the terms of the bond.Singapore has launched Project Guardian seeking to determine whether tokenised real-world assets and deposits could be transacted on a public blockchain,leveraging DeFi protocols,

126、in a compliant manner that preserves financial stability and integrity.Project Guardian has conducted foreign exchange and government bond transactions against liquidity pools comprising tokenised Singapore government securities,Japanese government bonds,Japanese Yen deposits,and Singapore Dollar de

127、posits.It has demonstrated the feasibility and transformative potential of using DeFi protocols in financial markets with appropriate guardrails.It has also validated the crucial role of two key factors:1)the use of regulated institutions to act as“trust anchors”,issuing and verifying the credential

128、s of participating entities to establish the identities of the transacting parties and connect with existing legal frameworks,and 2)the need for an agreed-upon set of technical standards.Both are essential elements for Institutional DeFi and can be helpful across systems and jurisdictions to drive a

129、doption and improve transaction efficiency for a globally integrated finance industry.Oliver Wyman17Contents|Digital Assets and Web3DeFi,blockchain,and tokenisation gives us the opportunity to standardise the actual data representation of these things and possibly have them on the same rails.That al

130、lows you to create value in ways that we cannot do today.Umar Farooq,CEO,Onyx by J.P Morgan INSTITUTIONAL GRADE CUSTODYInstitutional adoption has the potential to be a driving force for the digital asset ecosystem,however with the backdrop of exploits and bankruptcies,institutional-grade custody sol

131、utions are required to drive adoption for those offering,and consuming,digital asset products and services.Custody requires secure vaulting(storage of key devices in high security facilities),cryptographic hardware to protect secret keys,governance and controls around the movement of funds process,d

132、istributed backup sites to ensure business continuity,and reporting tools for customer transparency.Ecosystem participants are looking for custodians whom they trust to safeguard their digital assets,a role that financial institutions already fulfil for participants traditional assets.Many instituti

133、ons are exploring custodial solutions,aimed at a range of markets from retail to institutional clients.BNY Mellons recently launched proposition bridges the gap between traditional and digital asset classes for institutional clients,and ensures the safekeeping of private keys and wallet addresses.We

134、 are the first.globally,systemically important financial institution that launched digital assets custody.but this is just the beginning.In many ways,we see digital assets as a new asset class.We think about all the offerings of tokenised assets,the opportunities are really limitless.limitless to ou

135、r industry,limitless to consumers.Roman Regelman,CEO of Securities Services and Digital,BNY Mellon Oliver Wyman18Contents|Digital Assets and Web3OUTLOOKWith market volatility and regulation still in flux,the digital assets and Web3 ecosystem is at an inflection point,with many holding different view

136、s as to how the industry will evolve.From a gradual adoption of the underlying technology by retail users,we are now seeing the explicit signs of a transformation of how the financial system works.Regardless,ecosystem participants will have to navigate industry-specific and macro-economic challenges

137、.Continued volatility of crypto assets,shifting value pools,and a tighter funding environment will make the clarity of value proposition,customer utility,and role in the ecosystem increasingly important.FUTURE SCENARIOSThe ecosystem could evolve in several different ways.On one end of the spectrum,d

138、igital assets remain niche and the ecosystem may only change incrementally from today.On the other hand,there could be a“DeFi system”revolution where financial systems as we know them today become completely transformed by new types of institutions and mechanisms for allocating funding and risks.Oth

139、er paradigms in between include the progressive evolution of todays banking sector,supported by digital assets or a system dominated by todays crypto natives.These paradigms paint the corners of what change may take place,but the future will likely combine elements across the paradigms.Oliver Wyman1

140、9Contents|Digital Assets and Web3Exhibit 5:Potential paradigms for the evolution of the digital asset ecosystem 1.NICHE USE OF DIGITAL ASSETS2.TRADFI SUCCESSFULLY EVOLVES3.RISE OF DIGITAL INTERMEDIARIES4.DEFI SYSTEMSParadigmsThe digital assets ecosystem only changes incrementally in the directions i

141、t is already movingEvolution,not revolution,and banks continue to dominateBanks successfully evolve,digital assets support their continued centralityIn between evolution and revolutionSignificant changes undercut the banks,which do a poor job of adapting,while crypto natives become dominantRevolutio

142、n:Financial systems as we know them are transformedNew types of institutions and ways of allocating funds/risk take holdWhat you need to believeThe ecosystem survives current polycrisisThe functionality of digital assets delivers massive efficiencies and existing institutions can adaptDigital assets

143、 proliferate in payments and investment faster than the existing system can adaptNetworks built around crypto“escape”into real world,can interoperateHow it could play outIncumbents experiments on,for example,custody,mirroring,AMM FX,but regulatory uncertainty limits ambitionValue add of specific off

144、erings drives the extent of adoptionDigital assets are adopted for specific,targeted purposesNew networks emerge,rivalling but not replacing existing infrastructureNew technology increasingly applied to solve legacy challengesBanks become enablers of new data-sharing technologies,tokenising financia

145、l infrastructures including bank deposits and assetsFlywheel effect as solutions cascade across the system,for example,B2C payments,corporate treasury,asset issuanceGovernments push industry to migrate to tokenised public/private networksRegulation slows down crypto natives,limits lending activityBa

146、nks,insurers,and asset managers maintain economic and intermediation roles,providing balance sheet to trading/lending in new infrastructuresStablecoins,CBDCs become widespread,powering further expansion/adoption of digital assetsWallets replace bank accounts,with customers preferring vertically inte

147、grated players given convenience(versus self-custody)Profitability of crypto enables pioneers to innovate,launch compelling new services in lending,origination,liquidityRegulatory framework built as authorities seek to lead on innovationProviders across the value chain able to work together to provi

148、de integrated service(emergence of data sharing,interoperability)Success of decentralised platforms,and potentially Web3,drives adoption of interoperable self-custodied walletsNew protocols and automated marketplaces connect users and investors,increasing marketisation when raising capitalIncreased

149、risk management of DeFi and tokenomics increase price stabilityGovernance shifts from traditional institutions to DAOs with successful tokenomicsAcceptance of digital collateral drives physical/digital convergenceImplicationsThe digital assets ecosystem exists largely in parallel to the existing fin

150、ancial systemIt remains a facilitator for ownership and value transfer in the metaverse,but fails to generate widespread institutional adoptionFinancial systems remain on traditional rails,and efficiencies,cost benefits,and new offerings are driven by alternative innovations and technological advanc

151、ementsCertain traditional infrastructure functions become replaced with DLT-based asset registries and settlement,offering lower costs of custody and asset settlementHuge efficiencies for clients(for example,payments,FX,liquidity)drives down banking revenues and liquidityPotential market concentrati

152、on as smaller players are squeezed out by cost of adopting new infrastructure,fight for talentPartnerships with digital asset technology providers critical likely emergence of“digital assets as a service”Strong competition for client front-end functionality and access points,including by big techPow

153、erful new companies emerge,operating globally,and squeeze other financial institutions out of client relationships(starting with younger,early adopters)Battle shifts to custody from operating accounts,smaller proprietary networks push for interoperability for relevanceBanks,FMIs hit by multiple pres

154、sures:Loss of business,pivot required in business models,costs to accelerate digital asset capabilitiesMarket leaders retain some influence;rest get hollowed out;digital assets as a service emerges given cost/capital expenditure,pace of innovationGreater participation and innovation,but participatio

155、n models will change dramatically via,for example,the metaverse,digital/physical lending platformsBlurring of lines between banking and commerce;activities embedded and seamlessData democratised;aggregators as the primary consumer touch-point metaverse/physical integrate,creating powerhousesShifting

156、 of risk onto investors,with growth and expansion of mechanisms for market-based finance,for example,large-pool stakingRisk management becomes critical as the ecosystem figures out how to manage volatility and stabilityProliferation of specialists serving key ecosystems between virtual and physical

157、worlds;protocols enable interoperabilitySource:Oliver Wyman analysis Oliver Wyman20Contents|Digital Assets and Web3EVOLUTIONARY DRIVERSFor the near term at least,continued inflationary pressures,crypto market volatility,and contagion are likely to continue to affect investor risk appetite.The US Fed

158、 will continue to raise interest rates until they see a discernible break in inflation,and investors and consumers are likely to curtail spending until the economic clouds start to clear.We are living in a poly crisis.The pandemic,war,record droughts,record floods,soaring inflation,interest rates,cu

159、rrency market volatility.We need to develop a“trampoline-like mentality”to bounce back from this crisis.Shocks are a given.The question is how will you absorb them.Taimur Baig,Chief Economist,DBSIf DeFi/Web3 is to prosper,they will need to strengthen governance and risk management practices similar

160、to those of TradFi.They need to have a robust governance framework,operational resilience,transparent business practices,and a holistic risk framework that covers risk elements such as liquidity risk,market risk,credit risk,internal and external contagion risk,and operational risk.However,as the con

161、tagion risk to retail investors today is becoming higher,regulators are evolving and may respond with tighter regulations and risk management frameworks.What we want to ensure is that the money which is available on the network to transmit these assetscan be considered a safe asset,safe currency,and

162、 as long as that is the direction,we are okay.But I think what is happening today,theres a massive exposure to retail investors who perhaps didnt understand the risk.Sopnendu Mohanty,Chief FinTech Officer,MASHistory has shown that projects built on reliable infrastructure and having clear utility wi

163、ll“future proof”themselves and be sustainable/profitable.Key traits include security,decentralisation,the ability to solve an underlying problem/demand,usability,grassroots enablement,developer community engagement,scarcity of supply,and scalability.Oliver Wyman21Contents|Digital Assets and Web3IMPL

164、ICATIONS FOR ECOSYSTEM PARTICIPANTSFinTechsMany firms have been focused on growth at all costs,willing to pay to acquire customers on the assumption it will attract funding and provide future monetisation opportunities.However,with macroeconomic and geopolitical uncertainty the focus is shifting to

165、sharper product-market fit and unit economics.FinTechs must focus and win in key markets,and ensure they are resilient to ongoing market pressures.What are the actual key markets that you have to be in as a business in order to be successful?In a bull market,you dont actually know whether its a grea

166、t idea to be in a particular geography because every geography is scoring So I think when people are thinking about where theyre spending dollars today,you spend on.the must-win opportunities of the business.Jonathan Levin,Co-Founder&Chief Strategy Officer,ChainalysisFinancial InstitutionsAdvancemen

167、ts in technology and the maturing regulatory environment pave the way for new products and services that utilise the underlying characteristics of DLTs in areas these institutions already participate.With the backdrop of exploits and bankruptcies,the role of established financial institutions as tru

168、sted service providers is likely to extend into the digital assets and Web3 ecosystem,with both institutional and retail customers looking for safer ways to store and transact the digital assets.Established firms can leverage the resilience offered by their diversified revenue streams and strong bal

169、ance sheets to build during the downturn,and with many crypto natives shedding staff to lower their cost base,there is talent in the market interested in stable income rather than start-up shares that wasnt there before the downturn.You have got to be consistent in your capacity to invest and sensib

170、le.When the top line is weak,you sort of dial back,when the top line is strong,you can spend some more money.Piyush Gupta,CEO,DBS Bank Oliver Wyman22Contents|Digital Assets and Web3Central BanksCentral banks should continue to play a key role in enabling a more resilient financial system.In the cont

171、ext of digital assets,this has emerged in the form of extensive research,experimenting and collaboration with international peers on CBDC development,large investments in core infrastructure(for example,DLT-based settlement rails),and supporting industry participants with the large-scale adoption of

172、 CBDC use cases.Regardless of the target state paradigm for the future of money,central banks are ultimately trust anchors and guardians of a new frontier for financial inclusion,providing real-time and granular levels of supervision,and facilitating fast and cheap payments both domestically and abr

173、oad.So,what is the role of central banks?Well,we are the providers,we sit at the heart of this,what we call a fiat money system,and as the technology moves its a fantastic time to live in,because there are so many promising technologies coming our way.We need to carry on our role,building infrastruc

174、tures that are open,so we dont end up in a lot of walled gardens,and incumbents or newcomers taking too large a share of the market,but actually an open infrastructure that provides competitiveness and inclusion,but also ensures stability.Cecilia Skingsly,Head of BIS Innovation Hub,Bank of Internati

175、onal Settlements Policymakers and RegulatorsThere is much to do,but it is increasingly clear what needs to be done.Policymakers and legislators must take a systemwide view on what is required,identifying gaps,working with ecosystem leaders,and introducing new policies in a self-consistent way across

176、 regulatory bodies and frameworks.I think it will be incumbent upon policy makers and regulators to be engaged with a whole set of stakeholders,including industry,to be thinking responsibly about the existing frameworks we have,what needs to be tweaked and evolved,and how can we come up with framewo

177、rks that protect consumers,institutions,and markets,but also allow for responsible innovation in this space.And there are no easy answers and there are no quick fixes.Adrienne A.Harris,Superintendent,New York Department of Financial Services Oliver Wyman23Contents|Digital Assets and Web3ACKNOWLEDGEM

178、ENTSAUTHORSOliver WymanElevandiJames GordonPartner and Asia Pacific Digital Assets LTek Yew ChiaPartner,Vice Chairman,Singapore and Head of Insurance,Asia PRafat KapadiaHead of InvestmentsGaurav GoelPSean CaseyEngagement MCONTRIBUTORSThis joint report would not have been possible without ideas and c

179、ontributions from numerous members across Oliver Wyman,Elevandi,and inputs from the Monetary Authority of Singapore.The authors would like to express deep gratitude to the following individuals:Oliver WymanJacob HookManaging Partner,Asia PacificUgur KoyluogluPartner,Global Head of Digital AssetsDoug

180、las ElliotPartnerLarissa De LimaSenior Fellow,Oliver Wyman ForumJames EmmetSenior AdvisorKeat LaiSenior AdvisorArthur WangPrincipalKatherine CoffeyConsultantOliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialised expertise in strategy,operation

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