Has tokenization’s time finally come?
Tokenization is spreading fast. Regulated finance is finally embracing blockchain technology just as most cryptocurrencies stand revealed as overleveraged Ponzi schemes. The institutional herd is moving, but can the blockchains they are shifting onto bear the load?
Against the odds, after the crypto winter of 2022 and this year’s regulatory freeze on unregistered securities offerings, tokenization of traditional financial assets is suddenly flourishing.
Evidence for this is everywhere. More financial institutions and corporate borrowers are issuing bonds in tokenized form on private and public blockchains. Private equity asset managers are tokenizing funds to extend distribution beyond institutional limited partners into high net-worth retail.
Big institutional investors are looking to make portions of their holdings transferable in tokenized form. Some regulated entities are distributing individual stock tokens and even tokenized US Treasury funds. Others are using blockchain to provide liquidity as a service for early backers and crossover investors in pre-IPO private companies.
And banks are creating deposit tokens to deliver cash for security tokens in real time.
Partly, this stems from more issuers, investors and traders in traditional financial markets finally buying into the old blockchain promise of more efficient rails along which to raise capital and transfer value directly peer to peer, rather than through a heavily intermediated traditional system.