A-D
Access controls
Technical and procedural measures that limit who can enter a system and what they can do.
Why it matters: They reduce operational and security risk and help enforce governance rules.
Common confusion: Access controls alone are not governance. They must align with policies and oversight.
Related terms: Permissioning, identity, governance
Atomic settlement
A process where the exchange of assets and payment happens at the same time or not at all.
Why it matters: It can reduce settlement risk.
Common confusion: Atomic settlement does not remove the need for controls or governance.
Related terms: Settlement, settlement finality
Audit trail
A record of actions and events that allows activity to be traced back to accountable parties.
Why it matters: It supports investigation, reconciliation, and control validation.
Common confusion: An audit trail does not mean anyone can see everything that everyone has done. Access can be controlled.
Related terms: Oversight, operational monitoring, traceability
Beneficial owner
The person or entity that ultimately holds the entitlement to or economic interest in a security, even if the security is held through intermediaries.
Why it matters: It helps clarify roles and responsibilities across the market structure.
Common confusion: The beneficial owner is not always the name on an operational record.
Related terms: Entitlement, record date, custody
Blockchain
A type of shared digital ledger that records transactions or data in linked blocks, creating a chronological record that participants can rely on under the blockchain network’s governing rules.
Why it matters: Blockchain can support shared recordkeeping, traceability, and automated processing, but its value depends on the governance, controls, and design of the specific network.
Common confusion: The beneficial owner is not always the name on an operational record.
Related terms: Distributed ledger technology, smart contract, tokenization, permissioned environment, audit trail
Central Bank Digital Currencies (CBDC)
Digital tokens representing a claim on a central bank for a fixed amount of central bank money denominated in a single currency; they are also a central bank liability , with generally no credit or liquidity risk. It may or may not be programmable.
Why it matters: CBDCs could provide a digital form of central bank money, supporting payment innovation while raising important design, policy, privacy, and operational considerations.
Common confusion: A CBDC is not the same as a commercial bank deposit, stablecoin, or cryptocurrency; it is a central bank digital liability.
Related terms: Central bank money, stablecoin, digital asset, programmability
Collateral
An asset pledged or transferred to help secure an obligation, manage exposure, or support performance if one party cannot meet its commitments.
Why it matters: Collateral helps reduce credit and counterparty risk, supports financing and settlement activity, and can improve liquidity when it can be used efficiently across obligations.
Common confusion: Collateral is not the same as backing. Backing supports the value or redemption promise of an asset, while collateral is used to secure an obligation or exposure.
Related terms: Collateral mobility, haircut, backing, liquidity efficiency, settlement
Collateral mobility
The ability to efficiently move collateral across counterparties, markets, and jurisdictions to meet margin and funding obligations in a timely manner.
Why it matters: It can improve liquidity and reduce capital funding costs.
Common confusion: Mobility does not remove risk controls.
Related terms: Liquidity efficiency, settlement, risk management
Corporate action
An event initiated by a security’s issuer that affects the security entitlement’s holders, such as dividends, splits, or reorganizations.
Why it matters: Accurate corporate action processing supports market integrity.
Common confusion: Corporate actions are not just announcements. They are operational events.
Related terms: Entitlement, record date, issuer
Custody
The safekeeping and servicing of assets, including recordkeeping and lifecycle event support.
Why it matters: It supports operational integrity and client servicing.
Common confusion: Custody is more than storage. It includes ongoing servicing responsibilities.
Related terms: Position, beneficial owner, corporate actions
Data standardization
Using consistent formats and definitions so data can be more easily shared and processed reliably across systems and parties.
Why it matters: It improves consistency and reduces reconciliation over time.
Common confusion: Standardization does not remove the need for governance.
Related terms: Interoperability, reconciliation, audit trail
Deposit tokens
Transferable digital tokens issued by a licensed depository institution that evidence a deposit claim against the token-issuing bank or depository institution, for fixed amount of commercial bank money or fiat cash denominated in a single currency.
Why it matters: Deposit tokens could allow commercial bank money to move in tokenized form while preserving a deposit claim against a regulated depository institution.
Common confusion: A deposit token is not the same as a CBDC or stablecoin; it represents a claim on the token-issuing bank or depository institution.
Related terms: Tokenized deposits, commercial bank money, CBDC, stablecoin
Derivative token
A digitally native token that satisfies the applicable regulatory definition of a derivative instrument under local law.
Why it matters: A derivative token may carry the risk, rights, and regulatory treatment associated with derivative instruments, making classification and compliance central to its use.
Common confusion: A derivative token is not defined only by being digital or tokenized; its treatment depends on whether it meets the applicable legal definition of a derivative instrument.
Related terms: Digital native, tokenized security, rights conferral, regulatory classification
Digital asset
A digital representation of value or rights that is created, recorded, transferred, and stored using distributed ledger technology or other digital systems. A digital asset may represent a native digital instrument or a claim on an underlying asset, and may confer economic, governance, or access rights depending on its design and legal structure.
Why it matters: Digital assets provide a foundation for new forms of issuance, ownership, and transfer mechanisms, enabling more efficient, transparent, and programmable financial and operational processes.
Common confusion: A digital asset is not limited to cryptocurrencies; it is a broad category that includes tokenized securities, stablecoins, digital representations of assets, and other digitally recorded rights or interests.
Related terms: Tokenization, digital representation, digital native, tokenized security, rights conferral
Digital native
A digital asset representing the primary record of value that is recorded directly on a blockchain or distributed ledger and is not recorded on another system of record. As a result, it does not require reconciliation with another system of record.
Why it matters: When a blockchain or distributed ledger serves as the primary record of value, organizations may be able to reduce reliance on parallel recordkeeping and reconciliation with another system of record.
Common confusion: Digital native does not simply mean an asset is represented digitally; it means the digital record itself is the primary record rather than a copy of another record.
Related terms: Digital twin, digital representation, system of record, reconciliation
Digital representation
A way of recording an asset’s key details and lifecycle activity in digital form, while the underlying legal rights, obligations, and accountability remain unchanged.
Why it matters: Consistent digital records can reduce mismatches between systems and improve reliability.
Common confusion: A digital representation does not, by itself, change the legal or economic nature of an asset.
Related terms: Tokenization, data standardization, audit trail
Digital twin
An electronically controllable record on a blockchain or distributed ledger that represents an asset immobilized on another system of record. The digital twin is reconciled with the original system of record to help ensure ownership and related records remain aligned.
Why it matters: A digital twin can help connect activity on a blockchain or distributed ledger with an asset's original system of record, supporting ownership tracking, control, and reconciliation across systems.
Common confusion: A digital twin is not a separate asset or a duplicate ownership claim; it represents an asset that remains immobilized on another system of record.
Related terms: Digital representation, reconciliation, system of record, custody
Digital wallet
Software, hardware, or a service that allows a user or institution to hold, manage, and use the credentials needed to access and control digital assets or records.
Why it matters: Digital wallets are a key access point for digital asset activity, making security, identity, custody and operational controls essential.
Common confusion: A digital wallet does not necessarily store the asset itself. It typically manages the credentials used to access or control the asset or record on a system.
Related terms: Custody, identity, access controls, private key, permissioning
Direct ownership
Holding a security or asset in the owner’s own name, with the owner reflected directly on the relevant system of record.
Why it matters: Direct ownership establishes a direct relationship between the owner and the asset, which can influence how rights, records, and servicing responsibilities are maintained and managed.
Common confusion: Direct ownership does not necessarily mean the owner handles every operational activity directly; service providers may still support custody, servicing, or processing.
Related terms: Beneficial owner, custody, entitlement, recordkeeping