Why Tokenization Of Assets Is 'The Future Of Most Transactions'

Traditional finance companies are leveraging the efficiency gain from the tokenization of assets.

It provides a means for assets to become fractionalized, programmable and liquid, Chintai CEO David Packham said Tuesday at the virtual Benzinga Crypto Festival.  

Tokenization For Retail Vs. Institutional Investors: When asked about opportunities the tokenization of assets presents for the retail investor versus institutional investors, said Scott Melker, the host of "The Wolf Of All Streets Podcast."  

“Digitization is inevitable. We see it across the medium. Now we see it with money. So we see a bit of retail enthusiasm starting in the NFT space, but that’s only scratching the surface of the real use cases, which go way deep on NFTs,” he said.  

“Tokenization largely is a better way to do things. It is a superior option to what we presently have. We are getting excited about dealing in Ape, NFTs and cartoons, but what happens to real mortgages? Tokenization is the future of most transactions.” 

Philip Gradwell, chief economist Chainalysis, Inc, said, “Anyone can create and distribute whatever is there in their industry. Anyone can create a financial asset. When you get that dynamic, you just get a huge amount of innovation. We are going to see that in finance and money. Tokenization is going to happen in more exotic areas.” 

New Opportunities For Traditional Finance: Packham said he thinks NFTs are going to be hot.

"What surprises me is that traditional finance sector has been interested in fractionalized tokenizing real estate. Real estate is different. You are adding liquidity to the previously non-liquidated asset class.” 

Paul Caldwell, CEO of Original Digital Corp., said: “Low hanging fruits in the traditional finance sectors are entertainment and gaming sector. What kind of NFTs do you create in this sector? It’s important to understand, 'how do you make a market for the NFT over a period of time?'"

NFT Regulations: "It's going to be a journey. The key things regulators understand about crypto are that they can regulate their venues even if they couldn’t regulate the asset themselves. That’s why exchanges have KYC. As we move into the world of NFTs, it becomes harder and harder to regulate the venues. But they don’t know what the point of regulation should be. And that’s an ongoing discussion,” said Gradwell.    

“There will be a voluntary effort from across, but it’s a very different game. The key point of regulation should be about if something goes wrong, how can you rectify?” Philip added.  

Chintai is creating a list of regulatory compliance globally, Packham said. 

"Compliance is an extremely advanced, fragmented, and reactive community of exams, balances and processes around the international monetary device," he said. 

"At Chintai, we solve those issues using transferring all of the business lifecycles for belongings."