Industry collaborations facilitate the release of a paper focusing on blockchain compatibility issues
In a significant stride towards the future of finance, a leading website has joined forces with major financial institutions and Web3 innovators to produce a landmark paper on achieving interoperability for tokenized assets across public and private blockchains and legacy systems. Entitled "Institutional Interoperability: How Financial Institutions Navigate a Multichain World," the paper serves as a roadmap for financial institutions working on tokenized-asset opportunities and navigating a complex landscape of public and private blockchains, client, and regulatory requirements.
The paper, authored by blockchain analyst Emily Parker, based on a framework laid by the Monetary Authority of Singapore's Project Guardian in 2023, highlights key findings and recommendations on interoperability for tokenized assets. Georgios Vlachos, director of Axelar Foundation and co-founder of Axelar protocol, emphasized that tokenized assets are inherently interoperable, bridging assets recorded on off-chain ledgers with on-chain representations.
Institutions are moving beyond exploration to active building with blockchain technology, requiring infrastructure that supports scale, compliance, and multichain optionality. Major asset managers are tokenizing funds but demand infrastructure that allows these assets to flow freely across multiple chains, enhancing accessibility and liquidity.
The paper outlines the challenges faced by financial institutions in achieving interoperability across blockchains and with traditional systems. It underscores the need for interlinked network models that embrace multiple blockchains and the importance of seamless multichain access to institutional-grade credit strategies.
The contributors to the paper, which include Citi, Mastercard, and Northern Trust, as well as Web-3 native innovators such as the Axelar Foundation, Centrifuge, and Metrika, emphasized the need for enabling daily NAV pricing, instant subscriptions, and on-demand redemptions for tokenized assets.
Real-world deployments such as the Hamilton Lane SCOPE fund expansion powered by Wormhole's interoperability protocol illustrate how multichain interoperability can transform tokenized assets from static holdings into dynamic, universally accessible financial instruments across diverse blockchain ecosystems.
The paper recommends developing secure, scalable, and compliant interoperability layers and composable frameworks to meet institutional demands for liquidity, accessibility, and compliance in a multichain world. It also calls for fostering collaboration among blockchain developers, financial institutions, and compliance bodies to build interoperable ecosystems that integrate legacy financial systems with emerging blockchain networks.
The findings and recommendations will be discussed in a panel event at Point Zero Forum in Zurich, July 1-3. The bank believes that these technologies can provide significant benefits to its clients, outlining why it believes blockchain and tokenization technologies can achieve cost-effective, efficient, and faster value for clients with non-traditional business models.
The rise of multi-chain stablecoins and cross-chain liquidity further supports interoperability by providing faster transfers, lower costs, removal of bridge risk, and compliance-ready frameworks, enhancing decentralized finance's core liquidity and governance functions.
In essence, the paper finds that true institutional interoperability requires a combination of compliant, scalable multichain infrastructure and protocol-level interoperability that bridges tokenized assets seamlessly across public and private blockchains as well as legacy systems. The paper was published today.
Institutions are actively building with blockchain technology to support scale, compliance, and multichain optionality, with the paper outlining the need for secure, scalable, and compliant interoperability layers to enable seamless access to institutional-grade credit strategies. The contributors of the paper, including major players in finance, technology, and Web3, have called for collaboration among blockchain developers, financial institutions, and compliance bodies to create interoperable ecosystems that integrate legacy financial systems with emerging blockchain networks.
