Digital token identifiers want to set the benchmark for cryptocurrencies — but the picture is far from complete
- A new digital registry is being formed that will add unique identifiers to crypto tokens like
Bitcoin, Ethereumand others.
- These digital token identifiers (DITs) will launch in September.
- The underlying aim of these tokens is to add legitimacy to cryptocurrencies using norms from the International Organization for Standardization (ISO).
How successful this endeavour will be, however, is a different story and entirely uncertain.
DTIs — the origin story
AdvertisementA company called Etrading Software, which provides market infrastructure for crypto trading, has formed a non-profit organisation called the DTI Foundation, is the one working on creating identification for cryptocurrencies.
DTIs, or Digital Token Identifiers, will be akin to unique identifiers placed on assets on regular fiat currency-based trading markets — like stocks and derivatives. This allows regulators and others to track assets, identify them and quantify risks involved in trading.
The DTI Foundation aims to do the same for the crypto market, which has often been criticised for its volatile nature and role in facilitating illicit transactions.
According to a report by Reuters, the DTIs will be registered with the Foundation and it will use norms from the International Organization for Standardization (ISO), to be finalized by September this year. It will formally issue identifiers for the 100 most important crypto assets and tokens, aiming to cover over 80% of the market. This, of course, will include top coins like Ethereum, Bitcoin, Ripple, Dogecoin and more.
As the crypto assets sector grows in size, regulators and the market will need identifiers to track it better.
How will DTIs work?
The DTI Foundation hasn’t really explained how these identifiers will work at the moment, which is something that will need clarification. Crypto transactions are inherently trackable too, thanks to the nature of blockchains.
However, using ISO standards could mean that it will be easier for organisations, regulators and legacy platforms to get into the space, since they already have technology for such tracking built into their systems.
“Currently, the same digital token can have multiple identifiers. The DTI standard will work for industry to identify crypto asset trades to improve transparency and efficiency. It is expected standardisation could help investors that operate at scale and consequently manage large operations groups to process crypto-asset transactions without having to significantly rework their existing systems and processes,” the statement said.
According to the company, the DTI initiative will be led by the Product Advisory Committee ( PAC) which will meet once a month. One of the first areas of focus for this industry forum is stable-coins, a priority for the DTI Service upon launch in September.
The PAC will also discuss such topics as how future regulatory changes will impact the crypto-market landscape.
Will crypto exchanges jump onboard?
Not only is the use case for DTI uncertain, it’s also difficult to say whether exchanges will jump on board with such a system. Having said that, crypto exchanges like WazirX, CoinDCX in India and many others globally, have often argued that their existence gives the crypto space a level of accountability that it didn’t have earlier.
The PAC — which will oversee the implementation of DTIs — consists of 20 members, who represent a ‘cross section’ of crypto market participants, global institutional investors, standards bodies, academics, market infra providers and more. Which means that at least some form of involvement from the industry can be expected.
The presence of standards bodies could make DTIs an integral part of regulations that various governments are formulating right now, while market participants and infra providers could build them directly into their systems.
“We absolutely see there will be a regulatory mandate for reporting of digital assets and that’s driven by just the size of the digital market, which now cannot be ignored by regulators,” Danesh told Reuters.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
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