Laser Digital Invests in Crypto CCP
Posted by Colin Lambert. Last updated: March 27, 2023
Nomura’s digital assets subsidiary, Laser Digital, has announced a strategic investment in ClearToken, a startup that will introduce a clearing house to the digital asset marketplace, enabling, the firm says, the scale and structure required for mass institutional engagement with digital assets. As part of the strategic investment, Laser Digital’s CEO, Dr. Jez Mohideen, joins the board of ClearToken as a non-executive director.
Laser Digital was launched by Nomura to spearhead its digital asset ambitions and is chaired by Steven Ashley, who previously led the bank’s wholesale division. Headquartered in Switzerland, Laser Digital’s investments are focused on DeFi, centralised finance (CeFi), web3, and blockchain infrastructure to solve the challenges institutions currently face in digital asset investment.
ClearToken has been incubated by Laser Digital, and says it has identified a missing piece in the digital asset market structure. As traditional asset management, insurance and banking institutions face the challenges of engaging with digital assets, it says it will introduce traditional market structure best practices.
To this end, the firm is building a central counterparty (CCP) to address the key issues and challenges that arise in the market structure for digital asset trading. The CCP will remove bilateral counterparty risk for settlement, financing and derivative transactions by centralising clearing, settlement, collateral and risk management arrangements, akin to traditional exchange traded assets, ClearToken says.
This will enable, the firm adds, all participants in the ecosystem to face the CCP rather than each other, thereby streamlining transactions, increasing capital efficiency and reducing risk for all participants. ClearToken’s CCP is not native to any individual exchange or platform and can act to clear bilaterally-agreed transactions over-the-counter.
“ClearToken will provide a rigorous clearing house solution, modelled on traditional financial market infrastructures,” explains Ben Stephens, CEO of ClearToken. “A CCP for digital assets will reduce counterparty risk and manage default, bringing urgently needed market stability. It is our ambition that this solution will mature the market to its next stage. We are already in progressed discussions with a number of key market participants who are fully supportive of our initiative. With Laser Digital’s support, ClearToken has the confidence to take its next steps as an industry-leading team with significant experience and expertise.”
Central to the project is to work with regulators globally to develop regulation to which ClearToken says it will comply, in order to stabilise the current ecosystem, and safeguard its participants with a regulated CCP as a key part of financial market infrastructure. ClearToken is headquartered in the UK “to take advantage of the developments currently in process through the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority and HM Treasury”. It adds it intends to be “at the forefront of the UK’s drive to become a global centre for financial technology innovation”.
Niki Beattie, chair of ClearToken, says, “Digital asset technology has the potential to revolutionise financial markets offering enormous innovation in efficiency and transparency but we have also seen that it is a leap of faith to expect Defi to solve all market problems. Clearing houses will remain an essential market participant; their integration into the digital asset market structure can bring much needed stability and allow the innovative nature of this sector to continue within the regulated framework required to fulfill its transformative ambitions.”
Mohideen adds, “Laser Digital invests in projects which aim to address the challenges institutional investors currently face in the digital asset marketplace. ClearToken’s initiative has the capacity to remodel a marketplace fraught with bilateral risk, transforming this market as we know it.”