On July 1, 2021, Etrading Software (ETS) announced the launch of its Digital Token Identifier (DTI) Registry, marking its role as the exclusive Registration Authority for the International Organization for Standardization’s (ISO) new standard for DTIs.

Etrading Software's non-profit arm, which is dedicated to promoting industry standards and best practices, established the Digital Token Identifier Foundation (DTIF) registry as the official source for identifying digital tokens based on ISO 24165.

DTIs provide a registry and identifier assignment process for digital tokens, similar to that of securities ISINs. Their introduction should enhance liquidity, counterparty identification, price discovery, and post-trade processing efficiency.

The DTI Registry, which included 100 tokens and over 70 fork records at launch, is committed to continuous additions and verifications. This dynamic approach ensures that the registry remains comprehensive and up-to-date, covering all fungible digital assets using distributed ledger technology, excluding fiat currencies.

Industry figures, including Dominique Tanner of ISO TC 68/SC 8 and Rudolf Siebel of BVI German Investment Funds, not only supported the initiative but also acknowledged the benefits of standardized digital asset identification. This widespread support shows the industry's readiness for the DTI standard.

Acceptance of DTI by Different Regulatory Authorities

From Project Pyxtrial to FCA’s Digital Sandbox partnership to the recent MOU signed between ANNA and DTIF, there is clear support for the strides made by DTI and other major game players.

FCA's Digital Sandbox Adopts DTI

In December 2023, the Digital Token Identifier Foundation (DTIF) became a data supplier to the Financial Conduct Authority’s (FCA) Digital Sandbox.

This initiative aims to provide ISO standard identifiers for digital assets based on open data principles established by Etrading Software.

Denis Dounaev, the product owner of Digital Token Identifier (DTI), will act as a mentor in the Digital Sandbox Programme. The use of DTI is advised under the EU’s DLT Pilot Regime. The European Securities Markets Authority (ESMA) has suggested crypto-asset identification under the Markets in Crypto-Asset Regulation (MiCA).[1]

As the registration authority for the ISO 24165 standard, DTIF will furnish essential reference data for identifying digital tokens, while the DTI Registry offers technical attributes for over 1800 digital tokens.

The DTI Foundation has insisted that the data contributed to the Sandbox accurately reflects all information in the DTI Registry. Launched in 2020, the Digital Sandbox is a testing ground for firms in the early stages of product development, allowing for experimentation and proof of concept testing.

Dounaev encourages participants to explore the new dataset for digital tokens and their ledgers, presenting a valuable opportunity for collaboration with other significant players in the digital realm.

On 31 October 2023, The Association of National Numbering Agencies (ANNA) and DTIF signed a MOU to introduce ISINs for crypto assets, enhancing data automation and standardization in ISO registries.

This collaboration builds on joint efforts, which began in April 2021, to ensure a complementary relationship between the ISO 6166 ISIN and ISO 24165 DTI (Digital Token Identifier) standards. As part of this collaboration, the DTI Foundation will provide its expertise and resources to support the introduction of ISINs for crypto assets, enhancing data automation and standardization in ISO registries.

ANNA's National Numbering Agencies (NNAs) have a long history of issuing ISINs for various financial instruments, including security tokens.

The DTI Foundation, established in 2021, has issued over 1700 DTIs by October 2023. The Task Force's progress included the introduction of ISINs assigned by ANNA with a new XT prefix based on DTIs for crypto assets that were not classified as financial instruments.

The ISIN identifies the asset, while the DTI uniquely identifies the token's implementation on DLT. The integration aims to reduce operational complexity and costs by linking assets with digital tokens through an MOU, allowing DTIs to be issued an ISIN at ANNA’s discretion.

At the time, Denis Dounaev, DTI Product Owner at DTIF, stated that the collaboration would create a seamless mapping between financial assets and their blockchain implementations.

By embedding the DTI code in the ISIN code, market participants and public authorities can quickly identify digital assets using the ISIN and their corresponding blockchain implementations through the DTI registry.

Project Pyxtrial Adopts DTI

Project Pyxtrial is a collaborative initiative between the Bank for International Settlements (BIS) Innovation Hub and the Bank of England. It aims to explore how technology can be leveraged to monitor the balance sheets of asset-backed stablecoins. The project provides critical insights into whether the backing assets consistently exceed their liabilities.

Project Pyxtrial has developed a prototype data analytics pipeline to assist in supervising asset-backed stablecoin issuers. This pipeline encompasses data collection, storage, and analysis, enabling supervisors to access near real-time data about stablecoins' liabilities and their corresponding backing assets.

With Pyxtrial, supervisors can get frequent automated reports, enhancing monitoring efficiency. The project's technical components are modular, reusable, and adaptable for various purposes.

The Pyxtrial project has shown that it's possible to oversee the balance sheets of asset-backed stablecoins. Implementing and operating it requires a multidisciplinary team of regulators. Pyxtrial could also be used to monitor other tokenized products backed by real-world assets.

This technology could help supervisors and regulators detect issues in stablecoin backing and inform policy development using integrated data.

Efficiently Monitor: The Necessity of a Digital Token Identifier

As the demand for cryptocurrencies intensifies and institutional interest in digital assets grows, the need for a standardized digital token identifier becomes more apparent. A recent survey by Fidelity Digital Assets revealed that nearly 80% of institutional investors find digital assets appealing.

Challenges and Needs in the Crypto Asset Industry

The growth of crypto assets presents challenges for the industry, including the need to address structural and technical issues for institutional demand and help regulators understand traded assets. Consequently, a standard frame of reference is needed to ensure consistency in identifying digital tokens.

Overview: Problems of Fragmentation

The market is currently highly fragmented, making it challenging to identify digital tokens and categorize crypto assets. This leads to difficulties in aggregating trading activities across different exchanges and establishing a regulatory framework.

What are the Benefits of Standardization?

Introducing a standardized identifier could effectively resolve these fragmentation issues. Standardization would enable large banks and institutional investors to process crypto asset transactions without overhauling their existing systems, thus facilitating smoother entry into crypto markets. Additionally, central banks and regulators aim to enhance crypto markets' stability, transparency, and safety for all participants, present and future. This emphasis on standardization brings optimism about the future of digital assets.

For instance, the Financial Action Task Force on Money Laundering (FATF)’s 5th Anti-Money Laundering Directive (5AMLD) mandates that certain cryptocurrency businesses implement registration and reporting requirements similar to those of traditional financial institutions. However, meaningful transaction tracking and surveillance remain unfeasible without a systematic way to identify crypto assets.

In response to this need, the ISO has been working on defining a standard identifier for digital tokens since early 2018. In May 2020, ISO proposed the ISO 24165 Digital Token Identifier (DTI) standard, designed to be vendor-neutral, open, freely available, and global. This standard establishes a Registration Authority (RA) responsible for implementing the standard and issuing identifiers.

Etrading Software Limited has been recommended as the exclusive global RA. The first DTIs for popular digital tokens like Bitcoin began their roll-out in the latter half of 2021.

Building Trust Through Expansion

Investors and regulators significantly demand a trusted, machine-readable, and freely available ISO identifier for digital tokens. Data standards maintained by ISO, a respected international standards body, enhance quality by providing precise definitions for each data element, eliminating ambiguity, and ensuring consistent interpretation.

The standardization of digital tokens is poised to be a crucial next step, linking private-sector innovation with public-sector governance as the crypto asset market continues to evolve and expand.

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