Tokenization has many facets – technological innovations require a holistic view of the technological, legal, tax, accounting and business aspects.
Key to the future of tokenization
The tokenization of assets offers promising opportunities for financial markets. It is, however, still in its infancy and market adoption will take time. Key to the future of tokenization will be creating interoperability with existing systems to enable more widespread adoption. Participants in the value chain need to close gaps between each other and look for ways to bridge the traditional financial sector with new DLT-related businesses.
As tokenization offers new ways to represent, transfer and store assets, corporates need to assess the transformational impact on their business. Success hinges on a solid business and economic rationale as well as proper technical feasibility assessment.
If well designed, StableCoins and CBDCs could serve as an enabler for better cross-border payments. International cooperation is crucial for cross-border transactions of tokenized assets to limit regulatory arbitrage. Central banks are likely to collaborate with each other to carry out proof-of-concept work and pilot projects on cross-border payment and securities settlement arrangements.
Although international frameworks could take a few more years to come to fruition, asset tokenization is likely to play a crucial role in the management and trade of illiquid assets in the long term.
Discover more about asset tokenization in our brochure.
Summary
As tokenization offers new ways to represent, transfer and store assets, corporates need to assess the transformational impact on their business. Success hinges on a solid business and economic rationale as well as proper technical feasibility assessment.