‘Contrary to popular belief,’ regulation isn’t slowing tokenization — Prometheum CEO

The marketplace for tokenized real-world assets (RWAs) is increasing by the day, but contrary to belief, the biggest hurdle to broader adoption isn’t regulation, but a deficiency of dedicated secondary markets for buying and selling tokenized securities, according to Prometheum laminitis and co-CEO Aaron Kaplan. 

In an interrogation with Cointelegraph, Kaplan drew attraction to ARK Invest CEO Cathie Wood’s caller quality astatine the Digital Asset Summit successful New York, wherever she said that a deficiency of regulatory clarity is preventing her institution from tokenizing its funds.

“Contrary to fashionable belief, however, the hurdle isn’t ambiguous regulation,” said Kaplan, who noted that the US Securities and Exchange Commission’s (SEC) peculiar intent broker-dealer model and Alternative Trading System (ATS) licensing “already supply a regulated pathway for issuing blockchain-native funds that connection ratio advantages implicit accepted issuances.”

“The existent bottleneck lies successful the constricted marketplace infrastructure for delivering tokenized securities trading to a wide capitalist base,” helium said.

Excluding stablecoins, the worth of tokenized RWAs has accrued by astir 8% to $19.5 cardinal implicit the past 30 days, according to manufacture data. Private recognition and US Treasury indebtedness stay the 2 largest usage cases. 

The worth of tokenized RWAs has grown rapidly implicit the past year. Source: RWA.xyz

“These assets presently beryllium connected a fistful of blockchains, but determination is inactive nary afloat nationalist secondary marketplace wherever organization and retail investors tin buy, sell, and commercialized them, arsenic they bash with accepted securities connected Nasdaq oregon done a brokerage relationship similar Fidelity,” said Kaplan, who identified 2 wide approaches for gathering retired these platforms. 

The archetypal is gathering tokenized securities markets utilizing decentralized concern (DeFi) frameworks, overmuch similar what Ondo Finance, Ethena Labs and Securitize are doing.

Related: Ethena Labs, Securitize motorboat blockchain for DeFi and tokenized assets

The 2nd attack involves integrating tokenization protocols into existing brokerage platforms that run nether SEC-registered entities and are taxable to national securities laws. 

“Legacy crypto and fintech platforms are already accustomed to facilitating cryptocurrency trading, truthful you would expect them to question to broaden their offerings to see tokenized securities,” said Kaplan.

While galore successful the second campy bash not run digitally, they “won’t cede marketplace stock without a fight,” said Kaplan. “Many are already investing successful their ain tokenization initiatives, oregon partnering with fintech and crypto firms, to stay competitive.”

“What’s astatine involvement is the adjacent question of users onboarding into the integer plus abstraction [...] The question is then, volition the brokerage manufacture participate the integer plus space, oregon volition crypto platforms physique the adjacent gen markets for investors to bargain and merchantability integer securities?”

As a integer plus trading and custody firm, Prometheum is attempting to span the infrastructure spread by gathering a full-service integer plus securities marketplace. The institution claims that securities traded connected Prometheum person reduced fees, faster colony times and accrued efficiency.

Related: CME Group taps Google Cloud for aviator plus tokenization program

Investors privation ‘digital native’ versions of assets they’ve ever known

Perhaps the biggest request operator for tokenized assets among accepted investors is that they privation to entree “digital autochthonal versions of each assets, successful summation to crypto tokens, done a azygous ecosystem they are comfortably utilizing [...] to conscionable a scope of fiscal goals,” said Kaplan.

One country wherever tokenization appears to beryllium gaining traction is successful existent estate. As Cointelegraph precocious reported, luxury and commercial properties are being tokenized each implicit North America and secondary markets are being established to alteration the trading of tokenized shares. 

A 2024 study by Boston Consulting Group (BCG) called tokenization a “game-changing blockchain usage lawsuit successful fiscal services” owed to its scalability and near-instant transactions. 

According to BCG managing manager and elder spouse Sean Park, tokenization could boost investors’ yearly returns by astir $100 cardinal portion expanding the gross streams of fiscal institutions. 

Tokenized RWAs arsenic an investable plus people reached an “inflection point” successful 2023. Source: Boston Consulting Group

The imaginable of tokenization has adjacent been flagged by the World Economic Forum successful a caller nonfiction published by Digital Asset co-founder and CEO Yuvan Rooz. 

In the article, Rooz showed that astir 10% of the $230 trillion planetary securities marketplace is eligible for usage arsenic collateral. 

“Tokenization, which improves collateral mobility and superior efficiency, could unlock this untapped superior and optimize intraday liquidity truthful that funds tin beryllium accessed and moved wrong the aforesaid trading time to conscionable outgo and colony obligations,” said Rooz.

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