Tokenization:

• Tokenized assets are based on blockchain technology, which underpins cryptocurrencies like Bitcoin and Ethereum.
• Tokenization links economic value and rights of assets to digital tokens, allowing them to be bought, sold, and traded on blockchains.
• This process enables fractional ownership of assets, represented by digital tokens, facilitating easier trading and investment.

Types of Assets:

• Real-World Assets: Exist off-chain and require a custodian to ensure tokens are backed by physical counterparts (e.g., real estate, gold).
• Native Assets: Exist on-chain (e.g., cryptocurrencies) and are transparently managed without the need for external custodians.

Benefits of Tokenization:

• Enhances investment accessibility for small investors, especially in developing countries, by reducing costs and eliminating intermediaries.
• Provides retail investors better access to primary and secondary financial markets.
• Allows fractional ownership of illiquid assets, expanding investment opportunities.

Case Study: Real Estate Tokenization:

• Example of an investor tokenizing an apartment to raise funds for a startup.
• Process involves converting ownership claims into tradable tokens, trading tokens on a crypto exchange, and using proceeds for investment.
• Investor can repurchase tokens later, showing the flexibility and liquidity benefits of tokenization.

Challenges and Risks:

• Technological hurdles in scaling and interoperability of blockchains.
• Early stage of the tokenization business ecosystem with a demand for experienced partners.
• Regulatory uncertainties, especially for real-world assets, pose significant challenges.
• Despite benefits, there are high risks and uncertainties due to the lack of globally accepted regulatory standards.