Tokenization of Real-World Assets 'Changes How Value Is Transferred'
Institutions and fund managers have wanted to tokenize assets for some time, but it's been a manner of infrastructure catching up.
AUSTIN, Texas — Tokenization of real-world assets isn't anything new, but can only be done at scale – and a level that makes fund managers and institutions comfortable – because technology and infrastructure have caught up, panelists said at a panel at the Consensus 2023 festival.
Just as how big corporations were initially uncomfortable with cloud computing but it's now normalized for institutions as cautious as the Central Intelligence Agency, real-world assets will be eventually tokenized on private blockchains, then permissioned chains, and finally public chains, said Securitize CEO Carlos Domingo on stage.
"Firms are getting more comfortable with it," Domingo said. "Private blockchains are okay, but it only solves part of the problem."
Tokenization is the process of putting ownership of tangible assets, such as precious metals, on the blockchain, and offers the convenience of buying and selling these assets around the clock because the transactions do not involve traditional brokers.
Christine Moy, head of Digital Assets at Apollo Global Management, added that tokenization "changes how value is transferred" and is only possible now because the technological gap has been closed.
"The concept of tokenization isn’t new, but it’s taken on new legs in the past," Morgan Krupetsky, Avalanche Labs' Director of Business Development for Institutions, added, saying that institutions and investors have gotten comfortable with the technology as we've come a long way since 2017 when the idea first emerged on the market.
Rising interest rates have also added a sense of urgency in getting this technology ready for the mainstream because, Krupetsky said, because rising rates have compressed token prices and created a demand for new things on chain. We are at the point where the customer just has to say "yes please" to tokenization, she added.
If tokenization gets the positive market reception that the panelists on stage hoped it would, it would represent the next chapter in crypto, according to Securitize's Domingo.
"Crypto people focused on things that were not regulated. Things that weren’t necessarily very productive," he said. "Need to put real stuff on chain to be productive."
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.