Treasury Management: How to optimize Risk, Liquidity, and Reporting Across multiple Venues

The financial industry is undergoing a significant transformation. Projections indicate that Europe’s digital asset market could grow up to fifteenfold by 2030 – from EUR 240 billion in 2024 up to €3.7 trillion in the best case scenario. ¹ As DLT-based assets gain traction, financial institutions are assessing how to adapt their technical infrastructure to maintain efficiency while reducing manual workloads.

In the dynamic world of digital assets, institutions operate across different custody solutions, trading venues, and multiple other venues - often leveraging their own settlement processes. In this context, effective treasury management is crucial for proactively managing risks and liquidity, especially for Crypto Asset Service Providers (CASPs) operating under Markets in Crypto Assets Regulation (MiCAR).

The Digital Asset Treasury Management System

Meeting these demanding requirements necessitates a technological solution like a Digital Asset Treasury Management System (TMS) specifically designed for the unique characteristics of digital assets:

✅ Advanced Risk & Liquidity Management

Financial institutions can efficiently manage risk and liquidity across multiple venues and custodians by setting predefined conditions, intervals, and rules. If an asset exceeds a specific threshold on a venue, automated transfers are triggered to redistribute the assets - ensuring continuous risk and liquidity management.

✅ High Security & Full Traceability

With integrated safety features, financial institutions maintain complete control over fund transfers, including approval flows and allow-listing of destination wallets. A role-based approach assigns different responsibilities within the treasury management system, ensuring compliance and detailed traceability of all transfers. This is crucial for regulatory alignment and risk mitigation.

✅ Enhanced Operational Efficiency

Institutions can monitor all transfers across multiple venues and initiate withdrawals within one click - either manually or fully automated. To minimize operational errors, the system also enables predefined wallets and routing strategies. Manage risk and liquidity and streamline recurring operations with automatic transfer jobs.

The Role of Treasury Management Systems for CASPs

Especially for CASPs operating under MiCAR, a Digital Asset Treasury Management System becomes a vital tool in meeting following requirements:

Exchange of crypto assets for funds or for other crypto assets and Execution of orders for crypto assets on behalf of clients

• Managing Complex Settlement Processes: As MiCAR mandates secure and reliable operations involved in settlement, manual settlement processes can introduce errors and inefficiencies. The Trever TMS mitigates these risks by automating settlement workflows.
• Operating Across Multiple Trading Venues or Exchanges: Operating across multiple trading venues introduces inherent risk and liquidity management challenges. The Trever TMS simplifies oversight by consolidating balance data into a unified view and employs automated transfer jobs. These jobs schedule and execute recurrent or time-sensitive transfers without manual intervention. Furthermore, robust role-based access controls enforce internal governance and the segregation of duties for enhanced security and compliance.

Providing transfer services for crypto-assets on behalf of clients and

• Customers of crypto asset service providers can give individual transfer instructions, in which the CASP transfer crypto assets from the customer wallet to an external wallet specified by the customer. This is possible via the TMS in compliance with regulatory requirements.

Providing custody and administration of crypto-assets on behalf of clients

• Providing Custody and Administration of Crypto-Assets:
• Managing Assets Across Multiple Custodians or Wallets: Similarly, CASPs using multiple custody solutions require effective oversight and secure transfer mechanisms for risk and liquidity management. A TMS enables controlled transfers within wallet structures (hot, warm and cold wallets) and supports thresholds to manage risk effectively. To keep track of all transfers, it it also supports 24/7 reconciliation.

Robust operational control, efficient liquidity and risk management across diverse venues, and unwavering data integrity are fundamental to successfully navigating the dynamic digital asset market. To meet both client expectations and stringent regulatory demands like MiCAR, a dedicated Digital Asset Treasury Management System is a foundational component for achieving operational excellence and compliance in this evolving landscape.

If your financial institution is exploring ways to optimize digital asset treasury operations and enhance risk or liquidity management, our experts are available to guide you through any questions: contact@trever.io

Source:

¹ European DLT and Digital Assets Study 2024. (o. D.). zeb.rolfes.schierenbeck.associates GmbH. https://zeb-consulting.com/de-DE/publikationen/european-dlt-and-digital-assets-study-2024

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