Blockchain in asset management: An extensive review of opportunities and challenges

Abstract

Blockchain technology has emerged as a transformative force within the financial sector, particularly in asset management. This paper provides a comprehensive review of the opportunities and challenges associated with integrating blockchain in asset management practices. The opportunities presented by blockchain in asset management are multifaceted. The decentralized and immutable nature of blockchain enables increased transparency and security in the tracking and transfer of assets. Smart contracts, a key feature of blockchain, automate and streamline various processes, reducing operational costs and minimizing the risk of errors. This technology also facilitates real-time settlement and enhances liquidity, contributing to increased efficiency in asset management workflows. However, along with these opportunities come substantial challenges. Regulatory uncertainties, interoperability issues, and the need for industry-wide standards are significant hurdles that the asset management sector must overcome to fully harness the potential of blockchain. Security concerns related to the custody and protection of digital assets, as well as the scalability of blockchain networks, also demand careful consideration. Moreover, the integration of blockchain in asset management necessitates a paradigm shift in organizational structures and industry practices. Stakeholders must adapt to new ways of managing and transferring assets, embracing the cultural and technological changes inherent in blockchain adoption. Education and collaboration among industry participants are crucial for navigating the complexities of this transformative technology. In conclusion, this extensive review highlights the immense potential of blockchain in revolutionizing asset management while shedding light on the formidable challenges that need to be addressed for successful implementation. As the industry continues to explore and adopt blockchain solutions, collaboration and proactive measures will be essential in maximizing the benefits and mitigating the risks associated with this groundbreaking technology.