A new standard is in town. Where once identification of digital assets lacked uniformity, the Digital Token Identifier (DTI) brings consistency to support both market participants and regulators understand which tokens are being issued, traded, settled, and importantly, on which DLT network.

 

Emergence and adoption

 

The new International Organisation for Standards (ISO) standard for DTIs – ISO 24165 – emerged from the industry’s need to address remaining challenges for scaling services in crypto and digital asset markets. Challenges included:

 

  • Lack of standards in identifying digital tokens and ledgers
  • Unclear link between the token and any underlying security
  • Unknown governance and operational risks of the ledger

 

For these reasons, the ISO subcommittee SC 8 Reference data for financial services of the ISO/TC 68 Financial Services technical committee work developed and published the ISO 24165 DTI standard in September 2021. The DTI Foundation as Registration Authority (RA) to the new standard, along with its Product Advisory Committee (PAC), issue and maintain the DTI Registry.

 

The increasing adoption of tokenisation across traditional financial markets and concerns about market integrity and investor protection in crypto-asset markets have accelerated the DTIs path to wider adoption. In the EU, ESMA has recommended DTI use to complement ISINs for trade reporting of DLT-based securities under the DLT Pilot Regime which went live in March 2023. The DTI has also been proposed as the crypto-asset identifier for issuers and service providers under the Market in Crypto-asset Regulation (MiCA), due to enter into application from mid-2024.

 

Key stakeholders across crypto and digital asset markets such as banks, custodians, and FMIs are increasingly looking toward DTIs for a readily-available, standardised industry solution to integrate within their systems to future-proof data management for interoperability and scalability.

 

Complementary standards

 

The DTI is part of the ISO standards family, designed to complement existing ISO standards, such as the ISO 6166 International Securities Identification Number (ISIN), ISO 10962 Classification of Financial Instruments (CFI), ISO 17442 Legal Entity Identifier (LEI) and others. Each DTI captures reference data specifically on the token implementation, such as the ledger on which the token exists, any smart contract address, and the token validation mechanism.

 

Taking the recent DLT-based bond issuances of the Cantons of Basel and Zurich, the ISINs (CH1265890678 & CH1306117073 respectively) link back to security-related information, while the DTIs (RD9R6Z6FM & 7JMK1KK1R respectively) hold reference data on the tokens such as their implementation details on the SIX Digital Exchange private network. The DTI Foundation and the Association of National Numbering Agencies (ANNA) have established a task force to ensure both standards are complementary and interoperable, with different functions but intrinsically linked to bringing more transparency to the market. One of the outcomes produced by the task force is the creation of new XT prefixed ISINs based on DTIs to group tokens representing the same asset to reduce operational complexity and overall industry costs when obtaining the new data set.

 

DTI Foundation and the PAC

 

The DTI Foundation (DTIF) is a non-profit division of Etrading Software, a financial technology firm with a mission of solving market-wide problems by building market infrastructures for the new digital economy. As Registration Authority for the ISO 24165 standard, the DTIF’s mission is to provide the golden source reference data for the unique identification of digital tokens.

 

DTIF issues and maintains DTIs on a non-profit, cost-recovery model, to increase transparency in the digital asset space through the creation of a core reference data set based on open data principles and available as a public good. The DTIF Product Advisory Committee provides a forum for all industry stakeholders – including global institutional investors, standard-setting bodies, academics, asset managers and market infrastructure providers – to support the DTIF and its Board in implementing the ISO 24165 standard based on market and regulatory requirements. All are welcome to apply to join.

 

Contact us at [email protected] for more information.

 

See the full CMD publication here.