Crypto investors embrace blockchain technology

Crypto investors embrace blockchain technology

It's a bit old hat, say crypto investors, who are betting on blockchain technology breathing new life into traditional assets.

As crypto prices spiral upward, the market for 'tokenization' - introducing blockchain-based digital tokens that represent assets such as bonds, stocks, and real estate - may finally reach a critical mass.

London Stock Exchange Group, WisdomTree and Mirae Asset Securities have either invested in token trading and investment platforms over the past year or are in talks to develop them. Some companies such as Franklin Templeton, UBS Asset Management and ABN Amro have launched tokenized versions of assets such as money market funds and green bonds.

More than a third of institutional investors in the US and almost two-thirds of high-net-worth investors plan to invest in tokenized assets this year or next, according to two surveys of more than 300 players in total conducted by EY-Parthenon in May.

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It's possible for savings on transaction costs that have big investment players circling, according to Colin Butler, global head of institutional capital at blockchain firm Polygon Labs.

It's a knife fight right now for market share and profits, so these cost-reduction ideas are very powerful, he said, adding that institutions had spent years studying tokenization and were now more comfortable launching projects.

Backers say tokenization offers traditional finance more transparent trading, increased liquidity, plus reduced costs and settlement times by automating processes through smart contracts - blockchain-based Covenants that settle automatically.

On the other hand, critics point to lacks of consistent global regulation and limited traction with investors due to inadequate trading infrastructure, a lack of consistent global regulation and a lack of coherent global regulation. The actual issuance and value of tokenized traditional assets remain relatively small, he said.

Dune Analytics data shows the market cap of tokenized public securities at $345 million, a sliver of the 1 trillion-plus cryptocurrency market. For the last 30 days, those tokens have experienced 2.3 percent growth, lagging behind bitcoin's rise of about 10 percent.

Some see a larger future, though: a joint report by Northern Trust and HSBC earlier this year estimated that 5 percent to 10 percent of all assets would be digital by 2030.

Although the tokenization industry has been around for more than two decades, the thriving market has never eclipsed much of the hype. Some market players are now seeing significant progress.

re seeing senior level buy-in from large firms, said Morgan Krupetsky, head of institutions & capital markets at Ava Labs.

Hurdles remain, with market participants also pointing to the need for larger trading pools. Some are optimistic, yet others are pessimistic.