Tokenisation of Real World Assets becoming killer institutional use case
Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
The news that the FCA and the Bank of England are setting up a Digital Securities Sandbox broke recently. While the possibility of tokenising real world assets has been discussed for years, the big difference this time is that financial giants like BlackRock are taking real actions. BlackRock has recently set up an on-chain $100 million fund, ‘BUIDL’, to invest in tokenised assets. Anyone can view the fund’s wallet on the Ethereum blockchain.
The case is crystal clear. Tokens are a faster, cheaper, more transparent and more accessible way to represent value. They can be programmed, moved around with ease, and applications easily developed around them. To list a traditional security on an exchange is an expensive, slow and opaque process. It is only open to a select few issuers. Only a small number of financial firms can do it. Compared to tokens, traditional securities are the equivalent of taking a photo of a print newspaper and putting it on a website. This is how websites started in the early 1990s. Over time, content started to become ‘digital-native’.
However, unlike with cryptocurrency, tokenised real world assets will face significant regulatory oversight from day 1. If the government and regulators play this right, the UK, with its enormous financial sector, could become a global leader for asset tokenisation. Some decision-makers seem to grasp the opportunity. Let’s hope they will not squander it.