The Global Blockchain Business Council (GBBC), in collaboration with Oliver Wyman, recently published the “Proposed Risk Mitigation Framework for Non-Financial Risks of Blockchain Infrastructures”—a comprehensive industry effort to establish standardized approaches for managing operational risks in public blockchain environments. The report draws on contributions from leading market participants, including DTCC, and reflects the growing recognition that resilient, secure, and interoperable blockchain infrastructure is essential for institutional adoption. This article examines the report from a financial market infrastructure (FMI) perspective, highlighting how our role in the industry guides our resilience strategies for tokenized assets and the “Internet of Value.”
The industry-backed Risk Mitigation Framework (RMF) outlines a concise, adaptable standard to help financial institutions safely integrate public blockchains by effectively managing non-financial risks, with a focus on tokenized securities. It leverages existing operational risk tools, such as the Operational Risk Reference Taxonomy (ORX), NIST Cybersecurity Framework (CSF), and cloud & security standards to create an adaptable framework that addresses the unique challenges and opportunities of blockchain infrastructure by integrating blockchain’s decentralized characteristics into familiar risk management constructs.
The framework’s goals are to align with existing institutional processes, facilitate regulatory acceptance, and remove adoption barriers by clarifying risk and control models. It distinguishes between novel, refined, and standard risks, applying tailored controls where needed, and adopts a phased rollout—starting with Layer-1 public blockchains and tokenized securities, then expanding to Layer-2 solutions, digital payments, and native crypto-assets. Developed collaboratively with major FMIs, industry players, and regulators, the RMF aims to harmonize policy development while ensuring resilient, interoperable, and institution-ready blockchain infrastructure.
FMI Insights on Managing Blockchain Operational Risks
FMIs serve as the backbone of the financial system by providing the trusted “plumbing” for clearing, settlement, and payment processing. They mitigate counterparty, liquidity, and operational risks through mechanisms like central counterparty services and default management, while ensuring market integrity, regulatory compliance, and transparent record-keeping. FMIs enhance efficiency by standardizing workflows, reducing costs, and enabling interoperability across markets by acting as neutral, resilient intermediaries that maintain trust and stability. Increasingly, they are also driving innovation through the adoption of DLT and tokenization – without compromising global financial stability.
Public blockchains are emerging as a natural evolution of broader technology shifts transforming financial market infrastructures. However, institutional adoption remains slow due to the absence of adaptable risk frameworks and regulatory support, underscoring the need for public blockchains to implement controls tailored to their decentralized nature. Recent advances in resilience and security make public blockchains viable for institutional-grade solutions. Adoption is slowed by complex governance and operating models, unlike traditional systems with clear service level agreements that clearly define responsibilities and liabilities. However, decentralization reduces single-point failures and shifts FMI risk from centralized control to distributed resilience.
Just as the ORX addressed internet-era risks, the RMF for public blockchains offers a flexible standard to align with institutional frameworks, gain regulatory support, and enable policy harmonization – removing key barriers to adoption. As the internet evolves into an asset mobility network, often referred to as the “Internet of Value,” blockchains enable a shift in modality: from transmitting dematerialized asset data to transacting with tokenized assets. This report applies a similar taxonomy approach to this new paradigm, aligning risk management principles with the realities of tokenized asset infrastructures.
The pace of tech innovation exceeds institutional and regulatory adoption, a gap magnified by FMIs’ systemic risk responsibilities. As we stand at an inflection point with AI, blockchain, and digital assets, the imperative for FMIs is to bridge innovation with institutional-grade resilience. Drawing from ORX, the RMF provides a focused framework for regulation, policy, and adoption. This is essential in the “Internet of Value” era, where FMIs must manage dematerialized asset data and guarantee secure movement of tokenized assets across legacy and modern systems – backed by 24/7 uptime, disaster recovery, and transaction integrity.
References: