TASHKENT, Uzbekistan, August 25.
Blockchain-based solutions could help address cross-border
liquidity constraints, improve collateral mobility and facilitate
institutional investment in emerging markets, Rajesh Sabari, Chief
Commercial Officer at Liminal Custody, said, Trend’s special correspondent
reports from Tashkent.
He made the remarks during the Silk Road Finance & Technology
Forum.
According to Sabari, small and medium-sized enterprises (SMEs)
and the B2B segment continue to face constraints related primarily
to compliance and anti-money laundering (AML) requirements. “With
the emergence of regulated stablecoin issuers and fully
reserve-backed instruments such as Circle, we are seeing increased
traction. However, the ‘last mile’ challenge in terms of
cross-border liquidity in emerging markets has yet to be fully
addressed,” he said.
Sabari noted that the actual cost of a cross-border transaction
should be assessed across its entire chain rather than based solely
on the advertised onshore fee. “When working with regulated payment
service providers, pre-transaction screening, sanctions screening,
AML controls and compliance with the Travel Rule need to be
embedded into the transaction chain,” he said.
He also highlighted potential applications of blockchain for
institutional participants, including banks, financial
institutions, traditional trustees and capital market players.
According to Sabari, for these institutions the initial use case
may be less about cross-border payments and more about improving
collateral mobility, as significant amounts of capital can be
pre-funded and remain locked up. “This is where blockchain can
provide greater asset mobility. For example, tokenized debt
instruments, which most treasurers hold, can be moved much faster
and deployed through programmable logic,” he said.
Another potential application is SME lending in emerging
markets, particularly by providing foreign institutional investors
with greater access to local assets.
Sabari said that entering emerging markets can involve
significant administrative and other barriers, while blockchain
could facilitate the placement of identity and other relevant
information on-chain. “This does not mean that blockchain
immediately eliminates all liquidity concerns. However, it makes it
easier to bring identity and other relevant data on-chain, helping
reduce the risk premium that institutional investors assign to
foreign assets,” he said.
He added that Liminal Custody is focused on bringing
institutional policy controls, including whitelisting, key
management and asset segregation, onto blockchain-based
infrastructure. “The goal is to provide on-chain a framework
comparable to the one they operate under within a banking charter
or payment service provider license,” Sabari said.
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