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Tokenization of assets

The following information was compiled and published as part of the research project. This is the introduction to the three-part series.

Tokenization of assets / securities

Tokenization is based on distributed ledger technology (DLT) of which blockchain technology is the most prominent option. In recent years, these promising technologies and its adaptions into practice have continuously evolved. The knowledge among academics as well as practitioners has grown continuously, and several use cases have been developed and tested. After a first phase of initial coin offerings (ICO) that sometimes led to disappointment among market participants, a new era of tokenization seems to be evolving. Instead of tokenizing utility rights the focus now lies on assets and securities. These results for example in equity or debt tokens, which represent traditional financial instruments but are wrapped in a new, decentralized and (more than ever) digitalized form.

Evolution of digital assets - security tokens.png

To do this (and to eventually make it worthwhile) the whole traditional financing and investing processes as well as the respective infrastructure must be digitalized too. The challenge lies in combining the knowledge about the mechanics of capital markets, legal and regulatory requirements and technological possibilities into a profitable business model that benefits all participants of the underlying ecosystem.

Structure of the series of articles

Part 1:
Key benefits

Part 2:
The security token offering (STO) process

Part 3:
The importance of interoperability

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