Alexandre Kech: on how SDX is driving change in the digital securities industry with the DTI standard for all its services

Standardisation is key to ensuring stability and fostering growth in the rapidly evolving digital finance landscape. One leader driving this change is Alexandre Kech, head of digital securities at SDX. 

Recently, SDX has made waves in the industry by adopting the Digital Token Identifier (DTI) ISO standard, a unique identifier for digital ledgers, tokens, and cryptocurrencies.

In our exclusive interview with Alexandre, we delve into the significance of this adoption, the role of DTIs in the digital finance ecosystem, and Kech's vision for the future of digital securities.

1. What is the Digital Token Identifier Foundation's most proficient feature that led SDX to adopt the technology?

SDX has embraced the DTI standard for several compelling reasons. Firstly, we adhere to ISO and other pertinent standards that align with our business practices, as they ensure seamless integration with the traditional financial system and other stakeholders within our industry. 

Secondly, our choice to adopt the DTI standard is rooted in its explicit design to accommodate all fungible tokens, encompassing both native cryptocurrencies and digital securities. This recognition underscores the possibility of a single instrument being tokenised on multiple blockchains, clearly pinpointing the blockchain of issuance on a technical level. 

Lastly, our endorsement of ISO standards holds significant weight due to their industry-driven origin and meticulous development process. This characteristic is particularly essential within the realm of blockchain, where the ultimate state of affairs remains uncertain.

1. As per SDX, what steps are being taken to ensure the uniqueness and integrity of DTIs across different blockchain platforms?

DTIs are needed to provide a standardised and consistent way of identifying and referencing digital tokens across different platforms, systems, and jurisdictions. Each digital token is allocated a random, unique combination of nine alphanumeric characters based on a combination of unique and verifiable technical data elements (in accordance with ISO 24165-1:2021 and ISO 24165-2:2021). All registration requests submitted via the DTIF website are verified to ensure that:

• The token exists and is eligible for a DTI;

• The token has not already been assigned a DTI;

• Normative and/or Informative data supplied by the registrant meets the validation criteria.

The string of nine alphanumeric characters representing a DTI cannot be changed or modified once assigned.

1. How has DTI transformed the use of cryptocurrencies, and will it help solve industry problems like regulation and adoption?

DTIs offer market participants a unique reference for each cryptocurrency. Traditionally used “tickers” adopted by the crypto industry are not uncommon, and sometimes different issuers claim the same ticker (e.g., USDP, BTC, etc.). With the DTI, market participants have certainty that what they transact is the correct token, which reduces some of the risks associated with this market. Regulators are also increasingly looking at a global technology and ledger-agnostic standard. In order to regulate products, they first need to have certainty in identifying them. Using the DTI, regulators can:

• Gain insights into the impact on market participants and the market in case of operational outages or events within a blockchain.

• Identify market abuse through the detection of irregular and suspicious market activities.

• Detect anti-money laundering (AML) activities.

1. What impact do you think DTIs will have on the tokenisation of assets, such as real estate or intellectual property rights?

We believe that embracing standards like the DTI and others, such as ISO 20022 (a standardised framework for data, business processes, and messaging), to tokenise various assets will greatly bolster its global acceptance. Looking back at historical instances, the influence of standards on the expansion of worldwide markets is evident. 

For example, the inception of SWIFT in the 1970s went beyond constructing a private banking internet; it primarily revolved around establishing data and messaging norms. These norms facilitated a Japanese bank to seamlessly conduct business with a French bank by providing a shared "language," facilitated by ISO standards for currency codes (ISO 4217), country codes (ISO 3166), securities data definitions (ISO 7775 followed by 15022 followed by 20022) payment data definitions (ISO 20222), and so forth. 

Likewise, standards within the realm of tokenisation, encompassing identifier standards like the DTI and technical standards like EVM and other interoperability standards, will enable similar global harmony and connectivity.

The DTI standard has been developed to support fungible digital assets utilising distributed ledger technology, primarily focusing on security tokens, asset-backed tokens, and crypto-assets. The standard's flexibility, however, such as grouping DTIs under functionally fungible categories, helps to establish a uniform identification for tokens representing fractionalised fungible portions of non-fungible tokens representing unique real-world assets. Since the DTI standard went live, ISO has started a process to review and update the standard to handle emerging scenarios, including using NFTs for real estate or intellectual property. It is a well-defined process, and we expect that in the near future, the standard will support NFTs directly in these and other sectors.

1. Is the technology behind DTIs fully decentralised?

The DTI Registry is maintained in a centralised database to ensure uniqueness and consistent data quality. To ensure we provide the best service to the industry, DTIF has established a Product Advisory Committee (PAC) to oversee the standard implementation and, in the process of establishing a Technical Advisory Committee (TAC), to handle technical solutions. 

Any future decisions on technical solutions related to the registry distribution (including decentralisation) will be within the scope of TAC; we welcome all market participants to apply to this committee once the call for participation is launched later this year.

1. Are there any ongoing initiatives to further advance the adoption and standardisation of DTIs in the crypto industry?

The DTI Foundation is continuously improving accessibility to the standard. Recent updates to the registration and application process simplify DTI allocation, and ongoing development includes the creation of API connectivity for seamless integration with market participants and infrastructure.

We are also engaged with several industry groups on further development, adoption, and integration of the DTI standard. In the meantime, we continue to develop the standard and auxiliary services in alignment with market development and industry demand.

1. Are there any future developments we should look forward to from SDX after the adoption of DTI technology?

SDX's upcoming milestone involves a significant collaboration between us, the Swiss National Bank, and our members. This collaboration is focused on initiating pilot wholesale Central Bank Digital Currency (wCBDC) production transactions, commencing in October of this year. 

Setting industry benchmarks and standards for the seamless issuance of digital securities on blockchain, as well as digital currencies, like the Swiss Franc (CHF) wCBDCs, is one of the main reasons why SDX exists in the first place. This endeavour aligns with SDX's overarching purpose – to pioneer transformative progress in Switzerland and on a global scale. We aim to shape the future of capital markets and banking, acting as a pioneer in this dynamic landscape.