Some of Asia’s largest asset managers and financial services companies have released a report that outlines a future scenario for tokenized assets. Called as the Asia Securities Industry and Financial Markets Association, the group states in the document that tokenized securities have the potential to become a useful tool for financial companies. In addition, they highlight that this would require greater regulatory transparency.
The group includes Citigroup Inc., Nomura Holdings Inc., Standard Chartered Plc and PriceWaterhouseCoopers, along with the law firms Linklaters and Norton Rose Fulbright. In the report, they state that tokenized securities can represent an innovative, efficient, scalable and liquidity-raising funding and fundraising model, and it can provide liquidity.
“The link between traditional financial products and instruments and the blockchain technology offers all interested parties the reliability of a regulated instrument, combined with the benefits provided by a blockchain. In addition, as they are generally regulated as securities, they will also bring more confidence and support in the crypto market”, points out the text.
Advantages of tokenized assets
The tokenized securities are still relatively new in the blockchain industry. Thus, they initially attracted a particular interest in areas such as real estate. However, there has been limited adoption of the model, as institutional investors remain cautious and the regulators are still working to keep up with the rapidly evolving technology.
Among the benefits of tokenized securities, the report highlights the highest rate of settlement, automated compliance, and 24-hour trading. Another highlighted point is that regulators will have to work even more focused to make this happen, as more clarity is needed at all stages of the process. According to the recommendation, this should be included from the creating of the tokens to their selling and exchanging. To do this, it would be necessary provision requirements, custody and tax implications.
The document also points out that tokenized securities will require innovative solutions that go beyond technology. “In some cases, legal reforms will also be needed.”