So far 2023 has been characterized by breakout narratives – from the AI boom to the hype around Chinese crypto. Could DeFi tokenization of Real World Assets (RWA) be the next big thing?
Industry players from around the world gather for discussion at the UK’s largest crypto conference – the 6th Annual Blockchain Economy Summit.
lenix lye – Managing Director of OKEx – revealed that internal conversations surrounding the tokenization of RWAs have focused on liquidity and fractionalization as big drivers of growth.
“Tokenization of real-world assets will potentially bring instant liquidity to assets,” Lai claimed.
“It’s much easier when tokens can be changed … fractional shares [in RWA assets] Can be much more cost effective for the user and more attractive to market makers.
“Through tokenization we could potentially reduce costs from centralized intermediaries… so fractional shares could work – and it could bring adoption and increased liquidity to a much larger audience”.
private blockchain risk mitigation industry ecosystem
Prashant MalikSenior Technology Lead – Digital Assets at HSBC, has spent the last few years building a tokenization platform (HSBC Orion) for the multinational bank. Malik explained the challenges of tokenizing assets for DeFi.
“The way you build a token platform is quite different from a typical application, some of your KPIs need to grow rapidly or incrementally,” Malik explained.
“I think technology is probably the easier part, as we bring more product lifecycles onto the chain – the legal and regulatory requirements add up to a lot more complexity than the technical side.
“More broadly, other digital assets are basically on private permissioned blockchains – but that private ledger is the legal register for token ownership. If everyone builds their own private chain, it diversifies assets between – And while there are benefits from this – we have to ask whether we are fragmenting existing ecosystems.”
SEC Is Blocking DeFi Tokenization in the US
an interesting perspective came from Jonathan DunsmoorFounder of securities specialists Dunsmoor Law. Speaking on the challenge of US regulatory hurdles regarding DeFi tokens, Dunsmoor revealed the blockage by the SEC.
“Countries generally look to the US to see what we are doing – but over the past 10 years – the evolution from CeFi to DeFi has been difficult to regulate,” Dunsmoor said.
“I think the problem with regulators, especially in the US – is that they are not ready to push a button and say ‘it’s OK’.
“In the SEC, the previous chairman saw 4 [crypto] Action Letters Issued, 0 Action Letters Issued Under Gensler…Despite the Fact That DeFi and NFTs Have Been in Gensler’s Time at the SEC [booms],
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