Asset tokenization firm Securitize has taken a significant step forward by issuing the very first tokenized equities under the European Union’s experimental framework for digital assets. Done via the smart contract network Avalanche (AVAX), the tokens represent equity in Mancipi Partners, a Spanish real estate investment trust overseen under the scrutiny of Spain’s securities regulator.
Increasingly, traditional capital markets are interweaving with crypto through the conversion of mainstream investment commodities like private equity and debt into tokens on blockchain applications. Such tokenization could spawn a seismic shift in the present financial landscape, potentially ushering in a far more streamlined system, as projected by the Bank of America.
Some studies even anticipate the tokenized assets market swelling to a staggering $16 trillion by 2030. The potential advantages of this innovation aren’t just limited to an easier and transparent way to raise capital, they could also come with tax benefits and improved liquidity owing to secondary trading, as hinted by Carlos Domingo, co-founder and CEO of Securitize.
Last year, in the U.S, Securitize took strides in this direction by tokenizing investment funds managed by Hamilton Lane and KKR. It also extended its operations to Europe, entering Spain’s regulatory sandbox for digital assets. Securitize’s latest manoeuvre is viewed as the inaugural tokenized equity issuance under the EU’s Distributed Ledger Technology (DLT) pilot regime – a scheme meant to provide a regulated platform for trading equities and bonds using blockchain technology.
Eyeing the horizon, Securitize looks forward to receiving licenses to manage, issue, and trade tokenized securities in Spain and across the EU, once it wraps up a roughly six-month test period.
However, as promising as the prospects of tokenization may seem, it becomes equally crucial to tread this nascent territory with caution. The integration of crypto and traditional capital markets is a complex endeavor that necessitates rigorous oversight. With regulatory frameworks still evolving, protection of investor interests remains paramount. As we navigate this exciting landscape, it is important to stay informed and be vigilant with our steps. Innovations like these inch us closer to a future where the boundaries between the physical and digital economies might blur and create a truly global marketplace. Just how soon or smooth this transition will be, depends largely on how regulators, innovators and communities adapt to these changes.
Source: Coindesk
