Financial market infrastructures (FMIs) \u2014 including exchanges, central securities depositories (CSDs), clearing houses and custodians \u2014 are the backbone of the global financial system, ensuring that securities are issued, traded, cleared and settled securely and efficiently.<\/p>\n\n\n\n
Today, however, this infrastructure is undergoing one of its most significant technological shifts in decades. Digital assets, distributed ledger technology (DLT), tokenisation and artificial intelligence are driving a new wave of modernisation across financial markets \u2014 from digitising settlement systems to enabling tokenised securities and improving cross-border transaction efficiency.<\/p>\n\n\n\n
Modernising financial market infrastructure<\/strong><\/p>\n\n\n\n Historically, financial market infrastructures have relied on highly centralised systems and multi-layered intermediaries. Cross-border transactions, securities settlement and asset custody often involve several institutions, creating operational complexity, slower settlement cycles and higher costs.<\/p>\n\n\n\n Emerging technologies such as distributed ledger technology (DLT) are now offering alternative models. By enabling financial assets to be recorded and transferred on shared digital ledgers, DLT can reduce reconciliation processes and shorten settlement times.<\/p>\n\n\n\n One of the most widely discussed developments in this space is the tokenisation of real-world assets (RWA) \u2014 the process of representing financial instruments or physical assets as digital tokens on blockchain infrastructure.<\/p>\n\n\n\n \u201cTokenisation allows a digital certificate to represent ownership rights to a real-world asset,\u201d explains Reinis Znoti\u0146\u0161, Executive Director of the Latvian Blockchain Development Association. \u201cFor example, investors could purchase fractional ownership of assets such as real estate or financial instruments digitally, potentially lowering entry barriers and increasing market accessibility.\u201d<\/p>\n\n\n\n Major global institutions are already exploring tokenisation. Asset manager BlackRock<\/strong> and exchange operator Nasdaq<\/strong> have both examined tokenisation initiatives that could bring traditional securities onto blockchain infrastructure.<\/p>\n\n\n\n If adopted more broadly, tokenisation could transform how financial assets are issued, traded and settled, potentially improving market accessibility and operational efficiency.<\/p>\n\n\n\n Stablecoins and the future of cross-border payments<\/strong><\/p>\n\n\n\n Another key innovation affecting financial market infrastructures is the rise of stablecoins \u2014 digital assets typically linked to the value of fiat currencies such as the US dollar or euro.<\/p>\n\n\n\n Stablecoins are increasingly being used for cross-border payments and settlement between digital asset platforms.<\/p>\n\n\n\n \u201cStablecoins are already changing the way how international payments can be executed,\u201d says Znoti\u0146\u0161. \u201cTraditional transfers between countries can pass through multiple banks and take several days to settle. With stablecoins, those transactions can be completed almost instantly and at significantly lower cost.\u201d<\/p>\n\n\n\n For financial market infrastructures that handle large-scale transactions, faster settlement could reduce counterparty risk and improve liquidity efficiency.<\/p>\n\n\n\n However, large-scale integration of stablecoins into traditional financial infrastructure will depend on regulatory clarity and institutional adoption.<\/p>\n\n\n\n Regulation: building trust in digital markets<\/strong><\/p>\n\n\n\n As digital asset markets expand, regulators are increasingly focusing on creating a clear legal framework for the sector.<\/p>\n\n\n\n In the European Union, the Markets in Crypto-Assets Regulation (MiCA) represents a major milestone. The regulation establishes a harmonised legal framework for crypto-asset service providers across the EU and aims to improve investor protection, enhance transparency and provide legal certainty for digital asset businesses operating within the EU.<\/p>\n\n\n\n For financial institutions and market infrastructures, the introduction of MiCA provides a clearer regulatory environment for developing digital asset services.<\/p>\n\n\n\n \u201cClear regulation is essential for the long-term development of the industry,\u201d says Znoti\u0146\u0161. \u201cIt helps build trust in the market and creates a framework that allows companies to innovate while protecting investors.\u201d<\/p>\n\n\n\n The regulatory shift is already attracting international interest. Several companies from outside the EU are exploring licensing opportunities in European jurisdictions in order to operate across the single market.<\/p>\n\n\n\n The Baltic region emerging as a fintech hub<\/strong><\/p>\n\n\n\n While global fintech innovation is often associated with major financial centres, smaller markets are increasingly emerging as hubs for new technologies. In the Baltic region, Latvia is positioning itself as a growing centre for fintech and blockchain development.<\/p>\n\n\n\n According to industry data, Latvia currently hosts more than 120 fintech companies, employing over 3,600 professionals and generating close to \u20ac400 million in annual revenue. Digital assets are gradually becoming part of this ecosystem. A survey by the Latvian Blockchain Development Association and Norstat found that around 11.4% of Latvian residents own crypto assets, with adoption particularly strong among younger users.<\/p>\n\n\n\n Although the domestic crypto market remains relatively small, activity is gradually increasing, with digital assets still used primarily as an investment instrument rather than for everyday payments.<\/p>\n\n\n\n Technology strengthening financial resilience<\/strong><\/p>\n\n\n\n Beyond blockchain technology, artificial intelligence is increasingly becoming part of financial market infrastructure modernisation.<\/p>\n\n\n\n AI technologies are already widely used in financial institutions for fraud detection, transaction monitoring, risk modelling and cybersecurity \u2014 all critical components of financial system resilience. When combined with digital asset infrastructure, AI can help enable more sophisticated real-time monitoring and automated compliance processes.<\/p>\n\n\n\n For example, AI-driven monitoring systems can analyse transaction patterns across digital asset networks to identify suspicious activity, helping institutions meet anti-money laundering (AML) and know-your-customer (KYC) regulatory requirements.<\/p>\n\n\n\n Such technologies could strengthen the operational resilience of financial market infrastructures while improving efficiency.<\/p>\n\n\n\n Collaboration and industry development<\/strong><\/p>\n\n\n\n Industry collaboration is also playing an important role in developing the fintech ecosystem.<\/p>\n\n\n\n Events such as UN:BLOCK Europe<\/strong>, a blockchain and fintech conference held in Riga, brings together companies, investors and policymakers from across the global digital asset industry.<\/p>\n\n\n\n The 2026 edition is expected to attract more than 2,500 participants from over 40 countries, including representatives from major global organisations such as Mastercard<\/strong>, Kraken<\/strong> and World Liberty Financial<\/strong>.<\/p>\n\n\n\n This conference provide a platform for discussions on blockchain technology, digital assets, regulation and financial market innovation.<\/p>\n\n\n\n \u201cInternational conferences like UN:BLOCK Europe help put emerging markets as Latvia on the global fintech map,\u201d says Znoti\u0146\u0161. \u201cThey allow companies, regulators and investors to exchange ideas and build partnerships.\u201d<\/p>\n\n\n\n