From Nasdaq:

The Bank of International Settlements predicts a surge in national digital currencies and institutional investors gearing up to invest billions in asset tokenization. However, security controls remain immature, posing a significant challenge.

Smart contract vulnerabilities have caused massive financial losses for DeFi platforms like Compound. Such glitches can lead to substantial financial and reputational damage for institutions with a large customer base.

The debate over decentralization versus security intensifies as digital asset innovation progresses. Risks lurk beneath the surface, exacerbated by market volatility, regulatory challenges, and a sparse banking partner landscape for crypto companies.

Regulatory sandboxes may pave the way for more digital bond issuance within a blurred boundary between traditional and digitized finance. The development of regulatory frameworks is crucial to allow incumbent institutions to participate in DeFi ecosystems.

Permissioned blockchains offer a solution for regulated entities with their security protocols and limited participation. However, they underperform compared to public blockchains, highlighting the need for a careful balance between trust, technology, and compliance within the financial realm.



Read more at Nasdaq: Digital Assets Innovation Needs to Balance Decentralization and Security