Crypto investors bet on blockchain

84
2
Crypto investors bet on blockchain

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

As crypto prices continue to surge, the market for 'tokenization' - launching blockchain-based digital tokens that encompass 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. In addition to Franklin Templeton, UBS Asset Management and ABN Amro, others like Franklin Templeton, UBS Asset Management and ABN Amro have launched tokenized versions of assets like 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.

Cryptoverse: Psychedelic apes and a resurrection of NFTs.

It's possible for savings on transaction costs that have major investment players circling, said 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.

By automating processes through smart contracts, blockchain-based covenants, backers say tokenization offers traditional finance more transparency, increased liquidity, plus reduced costs and settlement times.

However, criticisms of trading infrastructure, a lack of worldwide regulation and still limited access to investors, are among those criticisms. The value and issuance of tokenized traditional assets remains relatively small.

Dune Analytics data shows that the market cap for tokenized public securities is $345 million, a significant rise from the 1 trillion wider market, according to Dune Analytics data. In the past 30 days, those tokens have experienced 2.3 percent growth, lagging bitcoin's growth of about 10 percent in the same period.

Some believe that by 2030, a joint report by Northern Trust and HSBC estimated that 5 percent to 10 percent of all assets would be digital.

While the idea of tokenization has been around for nearly as long as bitcoin, the thriving market has failed to generate much of the hype. Some market players are making significant strides.

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

The fear of large trading pools remains, as market participants point to, among other things, the need for larger trading pools. But some are optimistic.