Programmable capital markets are financial systems where assets and financial instruments are represented as digital tokens on a blockchain, allowing their behavior and transfer to be automated through smart contracts. This enables the creation of highly customizable and self-executing financial products and services. These markets can automate complex operations like escrow, collateral management, and dividend distribution. The underlying technology provides transparency and reduces manual intervention.
Context
The concept of programmable capital markets is a central discussion point in the evolution of decentralized finance and tokenized securities. News often covers how these markets can streamline traditional financial processes, reduce costs, and open up new avenues for investment and liquidity. Regulatory bodies are closely observing these developments to understand their implications for market structure, investor protection, and systemic risk, as these markets represent a significant shift from conventional financial infrastructure.
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