ISO 24165 for Digital Token Identifiers
The Bank of Japan (BOJ) has called for a meeting on November 17, 2021, to host a panel discussion and provide an “Overview of ISO 24165 Digital Token Identifier (DTI) and Related Standards”, with the aim of making the activities widely known to everyone involved in financial services. Interested parties may apply to participate in the Cisco Webex meeting (held in Japanese).
What is ISO 24165?
With the rise in popularity of peer-to-peer payment systems relying less on centralized authorities, and instead on aspects of cryptography, decentralized processing, and a distributed network for the maintenance of a shared record of transaction activity, the need to identify the digital tokens issued, traded, transacted or stored on these networks has grown. Stakeholders in the trading community, service providers, custodians, and regulatory bodies have identified numerous use cases where a standard identifier for accounting, research, tracking, and management of these digital tokens would improve efficiency and eliminate confusion in the marketplace.
However, the nature of these new types of digital asset means they do not fit within the structure of existing ISO identifiers in part because they might lack clear reference to an issuing authority and might not be considered the liability of an issuing authority or corporate governing body. These digital assets, in many cases, are cross geographic and monetary governance jurisdictions.
Though these digital assets are sometimes referred to as cryptocurrencies, virtual currencies or digital currencies, the term ‘currency’ has a specific meaning as defined by ISO 4217 (Currency Codes, eg. USD, JPY, KRW, etc.). This definition is in conflict with the nature of the digital tokens due to the reasons described above; namely, the lack of monetary authority and geographic location.
Where traditional financial instruments or currencies are tokenized for electronic exchange, and issued by a legal entity or a monetary authority responsible for it, other International Standards, such as ISO 6166 (ISIN — International Security Identification Number) or ISO 4217 may apply. To eliminate confusion, care has been taken to provide a clear definition and eligibility criteria for assignment of a Digital Token Identifier (DTI).
The data elements used to distinguish one set of digital tokens from another, are, wherever possible, objective, and publicly available. Inclusion in the registry and the issuance of an identifier signifies only the existence of the token and its 1:1 relationship to its identifier.
ISO 24165 is organized into the following two parts:
- ISO 24165–1 describes the method of registration and assignment of a DTI
- ISO 24165–2 describes the data elements required for registration and display on the DTI registry
[Source: Quoted from the ISO Online Browsing Service]
As per our highlight above, the standard will not address qualitative aspects of the token, including the legal or regulatory status and its suitability for investment. However, DTI can be considered a launching pad towards getting an ISIN (or a FIGI, or CUSIP), normally needed in systems that constitute the Financial Market Infrastructure of today.
Etrading Software (ETS) is a global provider of technology-led solutions and the exclusive Registration Authority (RA) for the new International Organization for Standardization’s (ISO) standard ISO 24165 for Digital Token Identifiers (DTIs) through the Digital Token Identifier Foundation (DTIF).
The International Token Standardization Association (ITSA) is a non-profit organization and special interest group aiming at setting market standards for the global token economy. ITSA has developed the International Token Identification Number (ITIN), the technical identifier issued by ITSA for both fungible and non-fungible DLT-based cryptographic tokens.
Thus, a joint task force between the two entities has been created, with a key deliverable to produce a set of recommendations for collaboration to DTIF and ITSA boards, including an outline implementation plan. These might include aligning DTIs and ITINs, automatic notifications between issuing authorities or white-label access and/or federated model.
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