“We’re so early” is one of the crypto sector’s best-known sayings, and when it comes to tokenizing real-world assets, it’s completely true.
Bullish estimates from Boston Consulting Group predicted last year that the crypto sector could be a $16.1-trillion market by the end of the decade — a truly staggering figure.
Analysts imagined a world where illiquid assets such as real estate, physical art and even exotic beverages were tokenized — opening up the door to fractional ownership. This could be a game changer, especially considering these are asset classes that have traditionally been inaccessible to broader audiences.
The tokenization of global illiquid assets could potentially become a $16 trillion industry by 2030.
— Coinesper (@coinesper) July 17, 2023
This is Real World Asset (RWA) tokenization.
And this will be the defining factor for the mass adoption of crypto.
Here’s everything you need to know:🧵👇 pic.twitter.com/1hGQ6llLgh
Tokenization’s potential to transform financial markets
Few people have the financial means to buy a Picasso painting, but if ownership was split up into thousands of smaller pieces, it could be affordable to everyday consumers. This stake in fine art could then be sold on secondary markets, giving people a true shot at financial independence if the asset’s value appreciates.
It could also shake things up in the stock market, where individual shares in publicly listed companies can be prohibitively expensive.
We’re only scratching the surface when it comes to what can be achieved, but there are still some technical and logistical hurdles to overcome. One of them concerns the lack of legal protection that arises when high-value assets are sold, and this has been a barrier for those tempted to deploy capital on-chain.
It’s also crucial for the exchanges that facilitate trades to be regulated, and policies to be firmly in place for dispute resolution.
While it may be early days in the journey of creating a multi trillion-dollar industry, encouraging steps are being taken to lay the foundational infrastructure for this nascent market.
Revolutionizing finance
Swarm, a regulated DeFi platform based in Germany, recently announced that it’s partnering up with Mattereum, a digital identity layer for real-world assets on the Ethereum network. Swarm’s goal is to facilitate the onboarding of high-value traditional assets to the blockchain — meaning everyone can benefit from greater liquidity, efficiency and self-custody.
Swarm’s co-founder Philipp Pieper described this as a “ground-breaking opportunity for investors and businesses worldwide,” adding, “Swarm is at the epicenter of building the financial markets of tomorrow, and to do this, we need the right partners.”
Fractional Ownership Tokens for real world assets has been the holy grail for the Ethereum blockchain for almost ten years.
— Vinay (@leashless) July 17, 2023
Toda, @Swarm and @Mattereum announce a partnership to deliver this capability to the world.
Real World Assets, broken up into tokens, securitised.
Read: https://t.co/OmESXuMdJ7
Mattereum adds value thanks to how its legal infrastructure is built on the United Kingdom’s common law provisions for digital commerce, which are enforceable in 172 jurisdictions under international law. Vinay Gupta, the project’s CEO, conveyed that the company had recognized the necessity of engaging in the purchase and sale of physical assets within the confines of legal obligations through the utilization of smart contracts during the project’s initial phases. Gupta noted:
“We are excited to work with Swarm, which is the only platform that can securitize these tokens and help us realize our vision of creating a more efficient, transparent and conclusive financial ecosystem on-chain, with the same assets we interact with in traditional markets today.”
Mattereum has described fractional ownership tokens for real-world assets as “the holy grail of the blockchain” and a development that will hugely boost adoption worldwide.
Swarm is already taking steps to roll out DeFi-compatible securities tokens, with asset-backed, tokenized versions of Apple, Tesla, Coinbase, Intel, Microsoft, MicroStrategy and NVIDIA stocks now available on the Polygon network. Crucially, trading is regulated by the Federal Financial Supervisory Authority (BaFin) in Germany.
“We are thrilled to welcome the advent of real-world assets on-chain, as it ushers in a new golden era of digital commerce,” Gupta added.
The concept of tokenizing traditionally illiquid assets and enabling fractional ownership could pave the way for wider accessibility and participation in valuable asset classes. The collaboration between Mattereum and Swarm exemplifies a pivotal step toward achieving this goal, with their focus on regulatory compliance, legal infrastructure and securitization of tokens.
As this journey unfolds, it holds the promise of reshaping the world of finance, ushering in a new era of inclusivity, efficiency and transparency in the realm of high-value traditional assets on the blockchain.
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