Tokenization of real world assets becomes the killer use case for institutions

Every day, Coin rule will review the state of the digital asset market for Blockbeat, your go-to source for news, analysis, opinion and commentary on blockchain and digital assets.

Recently, it was announced that the FCA and the Bank of England are setting up a Digital Securities Sandbox. While the possibility of tokenizing real-world assets has been discussed for years, the big difference this time is that financial giants like BlackRock are taking real action. BlackRock recently set up a $100 million on-chain fund called “BUIDL” to invest in tokenized assets. Anyone can view the fund’s wallet on the Ethereum blockchain.

The case is crystal clear. Tokens are a faster, cheaper, more transparent and accessible way to represent value. They can be programmed and moved easily, and applications can be easily developed around them. Listing a traditional security on an exchange is an expensive, slow and opaque process. It is open to only a select few issuers. Only a small number of financial firms can do it. Compared to tokens, traditional securities are the equivalent of taking a photo of a printed newspaper and putting it on a website. This is how websites started in the early 1990s. Over time, content began to become “digital-native.”

However, unlike cryptocurrencies, tokenized real-world assets are subject to significant regulation from day one. If the government and regulators handle this correctly, the UK, with its enormous financial sector, could become a global leader in asset tokenization. Some policymakers seem to be seizing the opportunity. Let's hope they don't squander it.