Tokenisation: Balancing Accessibility and Liquidity Challenges

The potential of tokenisation as a means to democratize ownership of high-value assets garners attention, yet its role in enhancing asset liquidity faces scrutiny. Carlos Domingo, CEO of Securitize, provides valuable insights informed by his extensive experience. While tokenisation indeed lowers ownership barriers, experts point out its limitations in guaranteeing easy asset sales, reflecting a balance between optimism and caution among industry leaders.

Can Tokenisation Truly Simplify Liquidity?

Tokenisation enables real-world assets to transition into the digital domain, ostensibly increasing accessibility. Domingo, however, argues this advancement doesn’t necessarily equate to simplified liquidity. Through his discourse, he illustrates that initial explorations reveal tokenisation’s limitations, as even tokenised assets remain challenging to trade swiftly.

“Providing liquidity to the asset class is as important as providing accessibility,” Domingo emphasizes, highlighting the market’s complexity.

Why Are Stablecoins Gaining Attention?

The success story in tokenisation is represented by stablecoins, which have adeptly utilized existing liquid assets. Companies have increasingly directed efforts towards these liquid assets like cash. Domingo considers stablecoins the “most successful” use of tokenisation, attributing their efficacy to the inherent liquidity of the assets they symbolize.

“That didn’t happen, because an illiquid asset is illiquid whether you tokenize it or not,” Domingo adds, dispelling misconceptions.

The future of tokenisation captures the interest of investors and regulators. During a recent SEC meeting, dialogues involving crypto and Wall Street leaders focused on addressing industry obstacles. Establishing a firm regulatory framework for tokenisation remains a principal concern.

Reports remain cautiously optimistic. Standard Chartered’s analysis predicts a significant increase in tokenised assets by 2028, unlocking substantial economic benefits. Despite mixed opinions, industry leaders are working together towards achieving progress in this dynamic sector.

Tokenisation’s future, while hopeful, is hindered by liquidity issues. It offers exciting opportunities to invest in once-inaccessible assets, but remains entwined with these concerns. Stakeholders’ ability to align with innovation while navigating regulatory challenges will be pivotal in merging digital and physical asset realms effectively.