Expert Insights: Navigating the Future of Asset Tokenization in the Crypto Industry
Summary:
The article offers insights from members of the Cointelegraph Innovation Circle on asset tokenization, a tech-forward solution that simplifies trading, transferring, and managing assets in industries such as finance and real estate. The experts emphasize careful selection of assets, diligent regulatory compliance, clear disclosures, rigorous Anti-Money Laundering and Know Your Customer measures, and continuous regulatory updates. They also discuss the key differences between security and utility tokens and suggest integrating techniques like multiparty computation for robust data security. The influence of regulatory bodies, the importance of asset authenticity, and the consideration of custody issues are also touched upon.
For many, transactions involving industries such as finance or real estate can be exasperating due in large part to the substantial amount of paperwork and bureaucracy involved. As expected, the crypto sector has come up with a technology-focused solution - tokenization. Through this method, real-world assets including but not limited to property, art, stocks, and bonds can be tokenized on a blockchain. This allows parties involved in the transaction to more efficiently trade, transfer, and handle these assets. The quantity of tokens owned by the individual is directly proportional to their stake in the core asset. However, as usual with the crypto business, navigating regulatory compliance can be tricky. There is little understanding around the tokenization of Real-World Assets (RWAs) in the U.S., with regulations expected to develop over the coming years. Now, 12 members of the Cointelegraph Innovation Circle share their valuable advice for businesses who are currently offering or contemplating offering an asset tokenization service. The assets that are being tokenized should be carefully selected. Considerations like understanding the key differences between assets like art, property etc., and rights like bonds, shares etc., are of utmost importance. Companies need to contemplate their responsibilities regarding the public offerings and contractual structures that link a token to the tokenized asset. – Sheraz Ahmed, STORM Partners The need for clear disclosures, stringent Anti-Money Laundering and Know Your Customer measures, data security, and maintaining ongoing regulatory updates is stressed upon. Moreover, actively engaging with regulators and taking advice from legal experts specializing in tokenized assets is crucial. – Irina Litchfield, Lumeria In terms of regulatory compliance, companies must remember that depending upon their nature, tokenized assets may be recognized as securities by regulatory bodies like the Securities and Exchange Commission. Therefore, adherence to securities laws along with proper registration and transparency is essential. – Tomer Warschauer Nuni, Kryptomon An RWA token simply represents ownership and requires a sporadic asset audit irrespective of it being a paper certificate, a blockchain digital token or a non-fungible token. The item's existence with the custodian needs to be ensured. – Zain Jaffer, Zain Ventures It's advised to keep track of current regulations and stay prepared for future ones. Therefore, adaptable compliance solutions are required. – Arvin Khamseh, SOLDOUT NFTs Embrace compliance at its inception. The solution should be flexible in order to adapt to emerging laws and norms. – Erki Koldits, OÜ Popspot For effective regulatory compliance, integrating multiparty computation (MPC) may be beneficial as it ensures secure data processing while maintaining decentralization and privacy. – Tiago Serôdio, Partisia Blockchain The approach of establishing asset authenticity can be adopted from the art sector. The asset authenticity verification should be on par with its real-world counterpart. – Oleksandr Lutskevych, CEX.IO Companies can use non-custodial solutions instead of custodial ones to ensure secondary sales and primary issuance regulations. – Jagdeep Sidhu, Syscoin Foundation Ensure that smart contracts for asset tokenization reflect current regulatory obligations. – Vinita Rathi, Systango The growth in RWA tokenization demands increased vigilance around white-labeled products. – Megan Nyvold, BingX It's important to understand the distinction between security and utility tokens and to comprehend the regulations in jurisdictions they operate in. Establish procedures to oversee compliance and be prepared for regulatory changes. – Anthony Georgiades, Pastel Network. The above article was shared through the Cointelegraph Innovation Circle. This is a trusted group of industry leaders and experts in blockchain technology who are laying the foundation for the future through networking, collaboration, and thought leadership. The views expressed may not align with those of Cointelegraph.
Published At
10/3/2023 4:00:00 PM
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