Towards 2023: the tokenization race is on 

As the year comes to an end, we want to take a moment to thank you for being part of our journey. From our family to yours, we wish you a happy and safe holiday season!

2022 has been a great year for our industry, with the tokenization movement on the rise. This month, BlackRock CEO Larry Fink stated that “the next generation of markets and securities will be tokenization of securities.” Moreover, this sentiment is being echoed by a number of institutions such as State Street and J.P. Morgan.

A further indication of this trend is the rapid growing demand from institutional investors for tokenized securities. BNY Mellon’s latest survey reveals that 97% of institutional investors agree that tokenization will revolutionize asset management, with 70% expressing their willingness to pay extra for increased liquidity and faster asset turnover. There is no doubt that financial institutions (FIs) have to place a high priority on tokenizing assets in 2023 in order to meet the demands of investors.

For years, the main FIs already experimented tokenization on private blockchains. Public blockchains were not seen as mature enough. Now, the majority of innovative FIs are launching tokenization projects on public blockchains, proving that the future of finance will be built on permissionless infrastructures as it meets the needs of security, accessibility, and interoperability. Time to market, costs, and scalability are becoming key decision factors.

If the blockchain network used is not permissioned, the smart contracts must bring control and compliance at token-level through identities, allowing for corporate actions and access to liquidity. While smart contract standards are usually open-source and free (e.g. ERC3643), it would take years for FIs to build a complete tokenization platform managing business workflows, data and smart contracts interactions. This would leave competitors who act quicker to seize market shares as the market is surely transitioning toward this new infrastructure.

A viable option for success is to use no-code/low-code enterprise-grade tokenization platforms that are already proven and interoperable with the ecosystem. Thus allowing you to focus on the core business as well as adjust your business models to better position your corporation in the era of tokenization.

The race is on, and we wish you a successful tokenization year!

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