Speciale Financial Times

Tokenized securities: what changes for savers?

The cryptocurrency boom ended in fraud and fines.
However, the digital asset revolution continues.
Banks and institutional financial managers have long been intrigued by the possibility of efficiency gains resulting from the use of the technology underlying cryptocurrencies: the shared digital ledger, also known as blockchain.
Some are increasingly convinced of its disruptive potential.
The big prize for financiers is the tokenization of securities and financial funds.
It all comes from the idea of standardization.
You can save time and money by eliminating financial intermediaries who are all working on different versions of the same data in their systems.
Transactions between them must all be checked and verified.
Tokenized volumes today are small.
According to Lamine Brahimi of digital asset group Taurus, clear and consistent regulation will be needed to achieve a certain scale.
It also depends on the involvement of “mega” custodians to safeguard holdings and the existence of robust tokenized money or deposits.
Institutions are starting to take advantage of the benefits that tokenization offers.
Franklin Templeton launched the first tokenized money market fund using the Stellar blockchain earlier this year.
Others are following.
Abrdn launched a tokenized sterling fund in the summer.
Hedge fund stocks are also moving to blockchain.
These could be just some of the benefits of blockchain technology.
According to Ralf Kubli, a board member of the Casper Association in Switzerland, tokenization could also make a big difference for markets such as private debt and structured finance.
Information about cash flows and payment obligations could be encoded into public tokens, potentially increasing liquidity and opening access to many more investors.
In this way, tokenization would blur the boundary that separates private assets from public ones.
This means it is potentially more than an efficiency tool for traditional asset managers.
Should it become mainstream, there will be an opportunity to challenge the alternative fund industry.
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