The global outlook on the tokenisation of assets has become more popular, and on Wall Street, this phenomenon will, experts predict, become very fashionable. Indeed, in March 2024, BlackRock Inc introduced their first tokenised mutual fund the USD Institutional Digital Liquidity Fund, currently valued in excess of USD500 Million. Looking back, the whole crypto revolution began during the Global Financial Crisis 2007 – 2009, as an alternative to banks who were of course struggling under the weight of mind blowing losses. The titans of Wall Street, who looked down their noses at the whole crypto movement, have now integrated themselves into the crypto currency business, but also have adopted the underlying *blockchain technology.
*Blockchain Technology – This is an advanced data mechanism that stores transactional records which allows transparent information sharing. It is also referred to as a decentralised public digital ledger and at its core is a chain of blocks where each block contains a set of data.
For those financial institutions who originally underestimated whole crypto world, there’s a reason that they have adopted tokenisation: money. They saw the blockchain as a way of digitising or tokenising traditional assets such as bonds, stocks, and Treasury Bills, thus making them faster and cheaper to trade. Today, not just in New York, but across the world, the tokenisation of assets such as those mentioned above, now include such assets as art, carbon credits and shares in property. Even golf courses and exclusive memberships are included, since it can include any asset that has a perceived commercial value. Interestingly, the HKMA (Hong Kong Monetary Authority) on 7th February 2024 issued their USD750 Million digital bond, and in the commodity market, gold tokens are already being traded with a market capitalisation of over USD1.2 Billion.
It is simple to understand that anyone who owns a token owns the underlying asset, where ownership can be easily transferred from one *crypto wallet to another in exchange for payment. Experts suggest that by 2030, the value of the tokenised market could reach USD2 Trillion (circa the size of the entire crypto market as valued today, excluding **stable coins). However, there is a downside for brokers, as such tokenisation schemes could in fact make them redundant, putting many employees out of work. Analysts suggest that in the short-term, bonds and private equity will be leading the charge in tokenisation of assets, with the potential of having their market structure reshaped, and having their supply and demand dynamics altered.
*Crypto Wallet – These wallets are designed to hold crypto currencies and tokens allowing these items to be sent and received from wallet to wallet. The wallet holds the owners “private key” which is an alphanumeric code generated by the wallet and is used to authorise transactions and prove ownership of a blockchain asset.
**Stable Coins – These coins are cryptocurrencies whose value is pegged to certain currencies such as the US Dollar, financial instruments, or commodities, and provide an alternative to the high volatility of other cryptocurrencies such as Bitcoin.
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