The TradeON Summit 2020 continues, and we want to talk to you about some interesting ideas exposed about the future of investment through tokenized securities. Here we show you a little more about the participation of Ethan Pierse, founder of the Cryptoassets Institute.
In this intervention the focus was on tokenized securities as the future for investments in general.
Why talk about tokenized securities?
In order to talk about the need for tokenized securities, Pierse expressed that the main problem for startups that want to use crypto is the issue of future profits. According to him, tokenized securities would become a “fuel for the solution of problems within companies” related to future profits.
According to Pierse, securities tokenization offers several advantages such as democratization, liquidity, fractional ownership, among others.
What types of projects can be done with this?
Some examples that work with tokenized securities are being mentioned within this event. Among them, in the real estate sector, the AssetBlock and Algorand project stands out. We also have the case of the alliance between RedSwan and Polymath that tokenized US $ 2.2 billion.
In the intellectual property sector, Pierse discussed the opportunities that security tokenization provides for people who want to have patent portfolios. This system allows the owner to keep his property on the asset, but monetize it through income division.
An example of this is what Mythic Market is doing, which has tokenized investment in collectibles in pop culture. Through this system you can finance the sagas of upcoming projects, since when these are about to come out, people look for previous material. With this option, those who have these previous contents can monetize it through tokenization taking advantage of the interest in the product.
“With all this we would definitely be reinventing investmentsPierse said. However, he also clarified that for its implementation there are some obstacles that must be overcome in the first place.
What are the tokenization problems?
Speaking at the TradeON Summit 2020, Pierse made it clear that there are four main obstacles to this scenario in which investments are made through tokenization of securities.
First of all, it is something new and so it needs more explanation before it can come true. Then, he highlighted the fact that what is wanted is a regulation that supports innovation, not a regulatory vacuum.
Next, he discussed the dilemma between having government regulation or decentralized regulation. “Humans make mistakes. We can see lawyers and other professionals who may have them. But the idea is that there is a mix with transparency “Pierse said.
Later, he added that for many the expectation is to replace these authorities entirely, and to rely on digital controllers that are immutable. However, it takes effort and time to get there. So if you want to launch the tokenized values you must work with what you have.
Finally, he spoke of “Know your Customer / Avoid Money Laundering” as one of the biggest obstacles. When it comes to securities regulation this is very important in terms of enforcement.
With the tokenized securities model, you generally have to establish your identity and the source of the funds for each transaction. However, many platforms only force it when you want to exchange a certain amount of crypto to fiat currency.
Instead, regulators want to know this at all times to make sure it’s not about money laundering. Right now, the cryptocurrency selling secondary market doesn’t necessarily have that KYC / AML duality.
However, Pierse stressed that all the progress made so far and the pending challenges are not a problem but an opportunity.
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