Asset Tokenization: Asia Will Crack this Trillion Dollar Market First
Watch as Asia becomes a tokenization leader!
Real-world assets, like stocks, bonds, and even real estate, will be tokenized. It’s not a question of if but when.
Tokenization has gone far beyond crypto and is increasingly making its way into traditional financial services, where most agree that an overhaul of existing asset transfer systems is welcome and necessary.
Whether it's tokenizing physical gold, as we saw with HSBC in Hong Kong last week, or BlackRock’s tokenized US Treasuries, it’s clear that blockchain tokenization is the future and happening now.
Why? Simple, the promise of instant atomic settlement is simply irresistible!
The only question in a few years will be: “How did Asia run away with this market?”
👉TAKEAWAYS
Advantages of Tokenization
The introduction of new financial products and services would be possible thanks to the digital representation of conventional assets (see, for example, tokenizing exchange-traded funds [ETFs] to create digital funds).
Tokenization is likely to help reach new customers thanks to its ability to allow for fractional trading in illiquid assets. These assets might include real estate, artwork, or other valued collectibles.
Tokenization offers the possibility of new operational efficiencies. That’s because the process would be anchored to a ledger that facilitates smart contracts. These, in turn, serve to automate and streamline the trading of the underlying assets and facilitate the flows of programmable funds.
But there are risks! There always are, and the biggest outside of regulation are the more rapid onset of financial crises, faster execution of financial frauds, and a smaller window of opportunity to make monetary policy decisions.
👊STRAIGHT TALK👊
Tokenization isn’t just the future. It is the now, and it will go mainstream in Asia first!
Asia will be first because Singapore and Hong Kong are embracing tokenization and looking to get a jump on the rest of the market.
The rest of the world will be stuck in tokenized limbo waiting for these laws to be implemented.
Singapore is developing standards for tokenization funds, while Hong Kong is developing securities regulations and providing guidance to banks to ensure consumer protection.
Asia will be the first to normalize tokenization and make it pay!
But there is another factor! Asia is also leading in CBDC projects and CBDCs are perfectly adapted to be used with smart contracts.
The ultimate manifestation of tokenized assets is paying for them with tokenized currency, and frankly, Asia will have its CBDC network up and running years before the West.
Watch as Asia runs off with another fintech market, this one worth trillions.
Thoughts?
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With Asia's leading role in CBDC and an increasing use of tokenisation for other assets could we see (possibly unwittingly) disintermediation of securities exchanges and trading venues (no need for exchanges to act as counterparty to the trade, just report asset transfer to the registry)? Elimination of commissions and T+0 would be the "pro", risk mitigation the "con".
Its a very good read but I was left with a question in my mind when I finished reading the article. For now i think only the ETH network allows for self executing contracts and has the potential for the same. Will not a lot of applications on the network cause a pressure on one single network and possibly hide any other potential breakthrough in this sector? Your thoughts and opinions are welcome?