The National Informatics Corporation of Iran has submitted to the regulatory sandbox of the stock market a plan to launch digital asset funds, the CEO said.
"The proposal is to create asset funds in the capital market, including for digital assets. The project was approved at the Economy Ministry's sandbox and was submitted to the stock market sandbox to determine its compatibility with [national] regulations," Ebinews.com quoted Ali Abdollahi as saying.
However, he concurred that the project has several aspects which need to be thoroughly studied, including its compatibility with Islamic principals.
A digital asset is any asset that exists in a digital format on the blockchain. A digital asset fund is an investment vehicle containing assets in digital format, where the assets share a specific investment objective or outcome.
Digital assets are tokenized, which means they are issued as a blockchain token that digitally represents a real tradable asset. Because of this blockchain aspect, current digital asset funds are considered alternative assets and most are structured as limited partnerships.
What makes these funds digital or tokenized is that they are recorded and transacted on the blockchain. They possess all the characteristics of its traditional peers, although they can be sold in fractions of a share and have the potential to be traded 24/7 over the blockchain.
"A decentralized market is a prerequisite of having digital asset funds," Abdollahi said. "Several markets across the world are moving towards implementing blockchain technology, and we are also making progress in Iran."
In a decentralized market, technology enables investors to deal directly with each other instead of operating from within a centralized exchange. A decentralized stock market allows investors to trade digital securities using blockchain technology.
Iran’s capital market authority recently launched a regulatory sandbox to help foster the development of startups specializing in financial services.
A regulatory sandbox is a controlled environment supervised by a public authority in which startups and incumbent players are allowed to test innovative products and services and face less risk of penalty for non-compliance with the regulation in exchange for certain safeguards – such as accepting a limited number of clients or intermediating limited transactions.
A key objective of the sandbox is to foster innovation by facilitating access of fintechs to financing in the early stages of development.
As fintechs offer new products in high regulatory uncertainty, they face serious challenges of asymmetric information and often struggle to raise capital to develop products and grow.
The informatics corporation is a holding company co-owned by the Central Bank of Iran, Bank of Industry and Mine, Bank Saderat Iran and Bank Melli Iran. It is in charge of developing electronic banking solutions and financial infrastructure.
