By Paul Rapino, IWA Head of Growth
Much has been written about a Central Bank Digital Currency (CBDC). Almost every financial institution and central bank is looking at the concept of tokenization and how it will impact financial services. Some of the top thinkers on this topic are members of the InterWork Alliance (IWA), so I am excited to have a front-row seat as the future takes shape.
Last week, I received a paper from one of our members titled “Central Bank Digital Currency: Towards A Composable Standards-Based Implementation.” In the paper, authors Vipin Bharathan and Mani Pillai from otc.digital explore the purposes of central banks, linking them to the rationale for CBDC and subsequent requirements. Their sources are public statements, speeches, papers from central banks, expert commentaries, publications from advocacy groups, and conversations with central bankers and other experts. The proposed solutions reference standards include the IWA Token Taxonomy Framework (TTF) for tokens. Not only is this exciting to see how the TTF is being used, it is also interesting and informative. Here is a bit more from Vipin and Mani and a link to their paper.
“otcDigital and its affiliates created and continue to maintain an institutional OTC trading platform that covers cash equities to OTC (Over-The-Counter) derivatives for over 15 years. otcDigital put this commercial offering into production at major investment banks and financial services firms. The product is continuously hardened over years of use in critical financial infrastructure and over many asset cycles. Over the past 3 years, otcDigital has incorporated various digital technologies — DLTs, blockchains, and multi-party computation (MPC) — to bring privacy, confidentiality and security to a regulated digital asset marketplace, extending and upgrading its original offering. otcDigital is also building the core infrastructure and platform with digital standards including the Common Domain Model (CDM) and Token Taxonomy Framework (TTF) to address digital assets covering CBDC, Stablecoins, Security Token Offerings (STO), and more.”
The authors have given IWA permission to make this paper available to you.
We’d also like to update you about the IWA and the Token Taxonomy Framework, and how our 60+ members are starting to embrace it.
The IWA is a member-led, non-profit organization — not a governmental organization. We are technology and politically neutral. Although highly aligned with what’s happening in the tokenization space, the IWA focuses on how organizations can define tokenization as a valuable business term and use tokens to work better together at the business level. Our intention when we launched in 2020 has remained constant: to empower all organizations to adopt and use token-powered services in their day-to-day operations across use cases and networks, bringing inclusivity to globally distributed applications.
Tokens will disrupt global economics and radically change how commerce will be transacted. While various implementations exist today for tokens specific to numerous blockchain platforms, the industry lacks a venue for all participants to collaborate on a shared description and approach – resulting in a lack of interoperability, reuse, and common ground to address regulatory issues. The IWA is this venue, developing a clear definition and scope of the token concept, including use cases, taxonomy, and terminology, and a specification neutral to the underlying technology.
The Token Taxonomy Framework (TTF) is a fundamental building block that bridges the gap between developers, line of business executives, and regulators, allowing them to work together to model existing and define new business models based on tokens. Our open-source Framework’s purpose is to:
- Clearly define common token concepts and terms in non-technical and cross-industry language using real-world, everyday analogies so that business, technical, and regulatory participants can understand them.
- Produce token definitions that have clear and well-understood requirements for token properties and behaviors that are implementation neutral for developers to follow and standards organizations to validate.
- Establish a base Token Classification Hierarchy driven by metadata that is simple to understand and navigate for anyone interested in learning and discovering tokens and underlying implementations.
- Deliver tooling meta-data that enables the generation of visual representations of classifications and modeling tools to view and create token definitions mapped to the taxonomy.
- Produce standard artifacts and control message descriptions mapped to the implementation neutral taxonomy and provide base components and controls that consortia, startups, platforms, or regulators can use to work together.
- Encourage differentiation and vertical specialization while maintaining an interoperable base.
For an in depth overview on TTF here is a video we released in March