A white paper study indicates a potential market of $3 trillion in tokenized assets for asset managers to capture. The problem is nobody knows exactly what they really are.
The market is beyond huge but nobody knows how to take advantage of it because, when it comes down to it, the fundamental building block behind it is a giant unknown.
That, at least, is the take from a white paper (registration required) penned by Calastone, the British-based technology group owned by global private equity group Carlyle that dubs itself the largest global funds network.
In a communique sent to the media Thursday, it looked at the fast-emerging reality for the asset management industry as evidenced by the steady uptake in investor adoption, particularly in Singapore, Hong Kong, Thailand, and Japan.
Green Bond Issuance
It also mentioned the Hong Kong government's issuance of the world's first tokenized sovereign green bond in that context and the Monetary Authority of Singapore (MAS) Project Guardian pilots.
«Asia’s regulators have also demonstrated strong appetite to capture the opportunities presented by tokenization,» Calastone indicated.
Despite all this, Calastone indicated there was a lack of consensus on exactly what should be tokenized, how, and to what end (or why).
Not Tackling Issues
It then went on to point out many of the glaring issues the fledgling industry currently faces, among the most important of them being that early adopters have since failed to address existing issues in current transaction chains.
Beyond that, it indicated that more often than not current approaches to tokenization simply seek to tokenize units of funds and little more. According to Calastone, that simply perpetuates core inefficiencies in traditional funds management processes.
Calastone says, however, that tokenization could mean so much more. According to them, it can be used as a «transformative tool» to creates a frictionless digital marketplace for asset managers by tokenizing the underlying assets of funds.
Securities Or Not
In finews.asia's opinion, not Calastone's, taking those approaches hints at little else than some kind of variation of a typical securitization process for any security - for assets that are not necessarily securities, or at least not yet, such as non-fungible tokens (NFTs).
But they go on further to state that combining tokenization with the distributed tokenization environment could trigger key players in the fund value chain to cooperate and work together in different ways than before by sharing data and pooling processes on a common network.
If so, that would indeed be a step up from common securitization processes. Until now, they were for the most part, fairly linear and proprietary to each issuing institution. Given that, maybe someday soon won't be only talking about open banking, but open tokenization as well.
