Maha Al-Saadi's summary of the Bank for International Settlements – BIS paper highlights the increasing relevance of Real World Asset (RWA) tokenization in today's financial landscape. Liquid Tokens' recent engagement in two international RWA tokenization projects—one in real estate and another involving bonds—reflects this trend. Current Trends in RWA Tokenization Growing Demand: The demand for RWA tokenization is primarily driven by institutional investors, private entities, and family offices. However, there is a noticeable shift as more on-chain professionals seek to diversify their portfolios by incorporating hard, on-chain assets into their investment strategies. This diversification is particularly appealing as it allows them to mitigate risks associated with traditional cryptocurrencies. Investor Behavior: There is a distinct difference in how investors perceive various RWA classes. For instance, real estate tokens are viewed differently compared to bonds or securities. This differentiation influences investment decisions and strategies within the RWA market. We are also seeing differences in the perceived value of RWA Tokenisation in emerging & developing markets vs more mature, traditional markets. Future Outlook The landscape of RWA tokenization is expected to expand significantly as more traditional assets transition into digital formats. This shift not only creates new investment opportunities but also enhances the integration of traditional financial systems with blockchain technology. As investor interest continues to grow, particularly from those looking to diversify into tangible assets, the future of RWA tokenization appears promising and dynamic. Thank You Maha Al-Saadi. #RWA #Tokenisation #capitalraise
📢 (21 Oct) Bank for International Settlements – BIS Report for the #G20 on tokenisation highlights the opportunities, risks and future considerations for central banks. 🔴 Tokenisation could have implications for the future of finance and the role of central banks in payments, monetary policy and financial stability. 🔴While tokenisation could offer numerous benefits for the financial system and broader economy, costs and risks also need to be considered. 🔴BIS report highlights four key considerations for central banks: ◾ Private sector initiatives. ◾Trade-offs between different types of settlement assets; ◾Sound regulation, supervision and oversight for tokenisation; and ◾The impact on monetary policy implementation. 🔴Tokenisation of money could have implications for the role of central banks in payments, monetary policy and financial stability. 🔴The report ◾Examined tokenisation - the generation and recording of digital representations of traditional assets on a programmable platform. ◾Looked at global challenges in the regulated payments sector and focused on the possible benefits of tokenisation in addressing existing frictions in financial markets. ◾Considered potential benefits of some of the innovative solutions involving new use cases and functions that are currently being explored around the world. ◾Notes that, while the potential benefits of tokenisation, such as cheaper and speedier transactions, have attracted interest, the costs and risks need to be considered. ◾They may also affect how pre- and post-trade functions are executed for money and other assets. In addition, ensuring appropriate governance and legal frameworks, credit and liquidity risks, as well as custody and operational risks will also require focus. ◾Highlights that risks may materialise in a different manner to the challenges faced by conventional market infrastructures. Tokenisation arrangements provide platform-based intermediation for financial assets that may lead to changes in how financial markets operate and are structured. 🔴In this context, the report focuses on four key considerations for central banks: ◾Responding to ongoing private sector tokenisation initiatives; for example, whether to foster interoperability in the case of fragmenting markets; ◾Assessing the trade-offs and the appropriate balance between different types of settlement assets in token arrangements; ◾Identifying, monitoring and assessing tokenisation arrangements that may need to be subject to sound regulation, supervision, and oversight; and ◾Assessing the potential impact of token arrangements on monetary policy implementation, for example through changes in the structure of regulated markets or the demand for central bank versus other types of money.
