Case Studies of Enterprise Tokenisation – Asset tokenisation and tokenised economy

Asset tokenization is a rapidly growing trend in the financial and technology sectors. This process involves converting ownership rights in a particular asset into a digital token on a blockchain.

●      Real-world assets - such as gold, real estate or artwork - can be represented as digital tokens.

●      Asset Tokenization enables fractionalization - lowering minimum investment requirements and allowing for more investors to participate in the funding process.

The rise of the tokenized economy represents a paradigm shift in how assets are owned, transferred, and exchanged, with profound implications for finance, investment, and the global economy. While challenges remain, the growing adoption of blockchain technology and innovative use cases are driving the evolution of the tokenized economy and reshaping traditional financial markets. In the tokenized economy, traditional assets such as real estate, stocks, commodities, art, and even intellectual property rights can be represented as digital tokens on a blockchain. These tokens are programmable, divisible, and transferable, enabling fractional ownership, liquidity, and easier transferability of assets.

Some of the asset tokenization use cases:-

·  Real Estate Tokenization: Real estate is one of the most popular sectors for tokenization. Companies are creating platforms to tokenize residential and commercial properties, allowing investors to buy shares in properties without the need to purchase entire units.

·  Art and Collectibles: High-value art and collectibles are being tokenized, enabling fractional ownership and investment. This makes it easier for collectors and investors to diversify their portfolios.

·  Commodities: Commodities like gold, oil, and agricultural products are being tokenized to provide more efficient trading and ownership mechanisms.

·  Financial Instruments: Bonds, equities, and other financial instruments are being tokenized to streamline processes and reduce friction in trading and settlement.

·  Regulatory Developments: Governments and regulatory bodies are increasingly developing frameworks to support and regulate tokenized assets, ensuring investor protection and market integrity.

·  Integration with DeFi: Tokenized assets are being integrated with decentralized finance (DeFi) platforms, enabling lending, borrowing, and trading of tokenized assets in a decentralized manner.

Here are the my favourite case studies in enterprise tokenisation :-

Case Study 1: IPwe Digital Assets are a revolutionary technology and the true manifestation of the promise of blockchain for enterprise. IPwe announced the minting of 25 million patent digital assets to foster the digital transformation of IP.

https://www.hyperledger.org/blog/2023/02/02/ipwe-launches-revolutionary-platform-and-deployment-of-25-million-patent-nfts-on-hybrid-casper-blockchain-and-hyperledger-fabric-network

Case study 2: Project Genesis from BIS: Prototype digital platforms for green bond tokenization. smart contract-based carbon credits attached to green bonds.

Project Genesis 2.0 led by the BIS Innovation Hub in collaboration with the Hong Kong Monetary Authority and UN Climate Change Global Innovation Hub, that explored the technical feasibility to digitise green bonds with carbon forwards (also known as mitigation outcome interests (MOIs)) attached to enhance the transparency, objectivity, and environmental integrity of the green bond market.

https://www.bis.org/about/bisih/topics/green_finance/genesis_2.htm

Case Study 3: Bond Evalue/BondBloX - BondbloX simplifies bond investing by allowing investors to track & trade bonds electronically – just like stocks.

https://www.hyperledger.org/case-studies/bondevalue-case-study

Case study4 : Canton.network by Digital Assets  : Industry’s First Global Blockchain Network for Institutional Assets. Canton distinctly balances the decentralization of public blockchain with the privacy and controls required for financial markets. No other network allows assets and data to move across applications with real-time synchronization and guaranteed privacy—without the need to sacrifice trust or give up control to central intermediaries. The pilot brings together a wide range of market participants: among the firms are 15 asset managers, 13 banks, four custodians, three exchanges, and the stablecoin issuer Paxos Trust Co. They include abrdn, BNP Paribas, DTCC, DRW, IEX, Nomura, Northern Trust, Standard Chartered, State Street, Visa Inc

Case Study 5: JPM(Onyx) Coin by JP Morgan / ONYX DIGITAL ASSETS : Onyx Digital Assets is an asset tokenization platform that enables financial institutions, asset managers and fintechs to unlock untapped utility for their financial assets. Recording and representing a financial asset as a programable token on a blockchain increases asset utilization and mobility, powers instant and atomic transaction settlement, provides real-time transparency of the asset lifecycle and enables operational process automation.

JPM Coin, is a permissioned system that serves as a payment rail and deposit account ledger, that allows participating J.P. Morgan clients to transfer US Dollars held on deposit with J.P. Morgan within the system, facilitating the movement of liquidity funding and payments in right time.

JPM Coin is used for approximately $1 billion of transactions each day.

Case Study 6 : HSBC Orion : HSBC Orion is the tokenization platform supporting this HK$6 billion/US$770 million digital native bond issuance and settlement.  HSBC has successfully helped the Hong Kong Monetary Authority (HKMA) complete a HKD6 billion-equivalent digitally native green bond issuance for the Hong Kong government. Digitally native issuances on the private blockchain of HSBC Orion means faster settlement times. The typical time for settling conventional bond issuance in Hong Kong is five days (T+5 settlement cycle). For this issuance, it was one business day (T+1 settlement cycle).

HSBC (HSBA) is tokenizing gold for everyday investors in Hong Kong. HSBC Gold Token is minted on the bank’s Orion digital assets platform.

Other than CBDC adoption across central banks are new way to tokenising currency and its has great potential to spur the tokenisation adoption. New use cases based on programmable money and tokenised assets could create efficient and revolutionary ecosystem.

Tokenisation – the process of recording claims on real or financial assets that exist on a traditional ledger on a programmable platform – needs to overcome several economic, legal and technical challenges. Tokenisation efforts must also address legal issues. Rules and regulations governing tokenised assets must be aligned with those of their non-tokenised counterparts, which requires regulatory coordination to prevent unintended consequences such as shadow activities, theft and regulatory arbitrage. This task is easier for assets subject to legal frameworks and regulations that are standardised and can be easily translated into a computer algorithm. Broader issues include those pertaining to investor and consumer protection, cyber security and regulatory compliance across borders.

The trend of asset tokenization is expected to continue growing as technology matures and regulatory frameworks become clearer. It has the potential to democratize access to investment opportunities, enhance liquidity, and transform the way assets are owned and traded.

#blockchain #tokenization #assettokenization #digitalassets

Refrences :

https://www.jpmorgan.com/onyx/onyx-digital-assets

https://www.jpmorgan.com/onyx/tokenized-collateral-network

https://www.canton.network

https://www.gbm.hsbc.com/en-gb/insights/financing/first-multi-currency-digital-bond-offering

https://finance.yahoo.com/news/hsbc-gold-token-goes-live-051918887.html

https://www.euromoney.com/article/2b97clbq6u418q664cb9c/capital-markets/hsbc-orion-tokenizes-commercial-bank-money-and-sterling-bonds