Central banks are exploring the issuance of digital currencies to promote financial inclusion and provide easier access to money for unbanked populations, with the potential to reduce dependence on cash, increase local currency adoption, and impact the role of international currencies such as the US dollar.
Tokenization of real-world assets on the blockchain is rapidly gaining momentum, offering benefits such as transaction speed, liquidity, cost-savings, and round-the-clock access, with experts predicting it to become a $16 trillion industry by 2030. Over 70% of financial leaders expect to use tokenization in their businesses, with potential impacts on asset trading, real estate transactions, derivatives, and carbon markets. Tokenization unlocks liquidity, enhances security and data protection, reduces transaction costs, and enables programmability and automation, making it a key driver of digital asset adoption and a fundamental shift in business operations.
Tokenization has the potential to improve efficiency, liquidity, and transparency in bond markets, according to a report by the Hong Kong Monetary Authority (HKMA), following a successful $100 million tokenized green bond issuance in collaboration with the local government.
The Hong Kong Monetary Authority released a report on its study of bond tokenization, highlighting the potential of distributed ledger technology (DLT) to enhance efficiency, liquidity, and transparency in bond markets, but also acknowledging the challenges and the need for fine-tuning existing legal and regulatory regimes.
The Digital Dollar Project collaborated with Western Union on a pilot project exploring the use of central bank digital currencies (CBDCs) for cross-border remittances, revealing several benefits such as reduced counterparty risk and increased accessibility for the unbanked.
Applying blockchain technology to financial markets could help reduce costs for issuers of financial instruments like bonds, but it also poses risks such as challenging sovereign authority and fueling tax evasion, according to a report by Moody's Investors Service.
The Tokenized Asset Coalition, consisting of industry leaders such as Coinbase and Circle, aims to promote the tokenization of traditional financial assets on a blockchain to bring the "next trillion dollars of assets" on-chain through education, advocacy, and fostering adoption of public blockchains and decentralized finance.
The value of tokenized real world assets is expected to reach $16 trillion by 2030, with $3 billion in assets already tokenized, bringing efficiencies in payment and settlement and democratizing finance by making global investment opportunities more accessible to the general population through fractionalized investments.
The Federal Reserve's decision to maintain interest rates and raise its long-term forecast for the Federal Funds Rate surprised many market participants, causing a slight pullback in the stock and cryptocurrency markets while highlighting the need for investors to focus on the actual health and viability of companies and the utility of the crypto ecosystem. Additionally, the article speculates on the impact of the U.S. Securities and Exchange Commission's ruling on Bitcoin spot ETF applications and the potential for cryptocurrency to become a mainstream alternative investment.
The appetite for tokenizing real-world assets on blockchains is growing, with both financial incumbents and crypto native players getting involved, and smaller participants such as retail users and businesses are now able to access these assets for remittances, savings, and payments.
The Federal Reserve's power to control the flow of dollars in the US is theoretical, as global credit flows freely and much of it finds its way to the US regardless of the Fed's desires, making the concept of a "soft landing" engineered by central bankers impossible and needless.
Despite the prevalence of private blockchains in the banking sector, the co-founder of Chainlink predicts that public blockchain protocols will ultimately become the biggest market for banks' tokenized real-world assets, as they offer diversified collateral and attractive yields. However, financial institutions in the US may proceed with caution due to regulatory uncertainty. On the other hand, European and Asian banks are progressing in this area, with companies such as Citi and JPMorgan exploring tokenization on public blockchains like Ethereum. Franklin Templeton has also embraced public blockchains, recognizing their cost efficiency and rate of innovation. Interoperability and cross-border liquidity are key considerations for banks as they adopt tokenization and explore ways to move assets across chains.
Blockchain-based lending platform, OpenTrade, has launched a tokenized U.S. Treasury bill pool, allowing accredited investors and institutions to access yield through tokenized treasuries.
Tokenization, the process of converting asset ownership rights into digital tokens on a blockchain, is disrupting securitization and the financial markets, according to Jenny Johnson, CEO of Franklin Templeton. Johnson highlights the benefits of tokenization, such as enabling payment mechanisms and smart contracts, and cites examples of artists like Rihanna and athletes who can leverage tokenization to monetize their works and future revenue streams.
Author Robert Kiyosaki believes that Bitcoin and other assets will become "priceless" as the Federal Reserve introduces a central bank digital currency (CBDC), leading to a loss of privacy and increased government control.
Blockchain technology is breathing new life into traditional assets as big finance firms invest in token trading and investment platforms, with more than a third of institutional investors in the U.S. and almost two-thirds of high-net-worth investors planning to invest in tokenized assets this year or next.
Tokenization, the process of linking assets to crypto tokens on a blockchain, is gaining prominence and attracting attention from regulators and financial firms as it offers investors access to previously inaccessible markets, improved liquidity, and greater efficiency, although it also introduces potential financial stability concerns and risks of transmitting shocks between crypto and traditional financial markets.
The Stellar Development Foundation and PwC have created a financial inclusion framework to evaluate the efficacy of blockchain projects in emerging markets, with the framework revealing that blockchain solutions can significantly improve access to financial products, lower fees to 1% or less, increase payment speed, and help users avoid inflation.
Swiss tokenization firm Backed Finance has launched the first real-world asset token on Coinbase's Base blockchain, offering a blockchain-based version of BlackRock's short-term US Treasuries ETF, with a 5.25% annual yield, to qualified investors and licensed distributors.
Bitcoin is predicted to benefit from a return to currency debasement by the US government, making it a potentially valuable asset for investors.
Australia's central bank is studying the potential launch of a central bank digital currency (CBDC) and exploring the benefits of tokenised money, which could save billions of dollars in costs in domestic financial markets.
Australia's central bank is exploring the potential of tokenised money and the launch of a central bank digital currency, which could save billions of dollars in costs in domestic financial markets and bring increased liquidity and transaction savings to issuers in capital markets.
