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Real-world asset tokenization outperforms the crypto sector
Real World Assets (RWA) tokenization has become the best-performing cryptocurrency sector, outperforming major sectors such as Ethereum (ETH) and Bitcoin (BTC).
Significant developments, including high-profile asset tokenizations and positive regulatory discussions, are driving this surge. It also highlights the growing potential and importance of the sector in the financial sector.
High-profile use cases and regulations power the RWA tokenization industry
According to data from crypto analytics platform Artemis Terminal, real-world asset tokenization was the best-performing crypto sector last month, outperforming the other 21 sectors by 58%. The Ethereum and Bitcoin ecosystems follow, with a performance of 26.1% and 18.2% respectively.
To know more: RWA tokenization: a look at security and trust
Performance of various crypto sectors. Source: Artemis
RWA tokenization has seen significant growth recently, driven by key industry developments. On June 4, Galaxy Digital released a Multimillion-dollar loan secured by a 316-year-old Stradivarius violin.
The loan uses the Stradivarius violin and its digital representation as a non-fungible token (NFT) as collateral. This strategy guarantees a strong safety for Galaxy Digital while providing flexibility in asset management. The physical violin remains in custody in Hong Kong, with strict requirements for its removal.
On the same day, Watford Football Club (Watford FC) also launched a digital share sale. In collaboration with the digital investment platform Republic, the sale offers approximately 10% of its shares. This share sale will be available on Republic’s platform and on Seedrs, its European counterpart.
Furthermore, regulatory developments have supported the sector. On June 7, the U.S. Financial Services Committee held a hearing titled “Next Generation Infrastructure: How Tokenization of Real-World Assets Will Facilitate Efficient Markets.” The hearing assessed the need for additional regulations to support the tokenization of real-world assets and derivative products.
Important personalities from the sector participated in the hearing. Carlos Domingo, co-founder and CEO of Securitize, and Robert Morgan, CEO of the USDF consortium, represented the real-world asset tokenization industry. Lilya Tessler, partner at Sidley Austin LLP, and Nadine Chakar, global head of digital assets at Depository Trust and Clearing Corporation, contributed from the capital markets sector. Meanwhile, Professor Hilary Allen of American University Washington College of Law provided an academic perspective.
Despite the differing perspectives of witnesses and lawmakers, the hearing highlighted the ongoing debate on blockchain technology in traditional finance. Regulatory clarity resulting from such discussions could pave the way for broader adoption of tokenization.
The long-term industry outlook remains positive. BlackRock CEO Larry Fink did expressed optimism about tokenization.
He noted its ability to enable customized strategies and instant settlement of bonds and stocks. According to Fink, these capabilities can significantly reduce settlement costs.
Jenny Johnson, CEO of Franklin Templeton, also highlighted the importance of transformation potential for tokenization of real-world assets. You cited examples like Rihanna’s NFT royalties and the St. Regis in Aspen’s loyalty programs.
“It’s this combination of loyalty programs with real-world resources and I think you’ll see more and more companies do this combination. It’s just that technology allows you to do it,” he explained he thought.
Additionally, Johnson noted that asset tokenization, such as Franklin Templeton’s tokenized money market fund, offers lower entry points and operating costs, making professional asset management more accessible to younger investors. He believes he is holding investments in digital wallet can encourage young people to save for retirement by enabling smaller, more manageable investments.
To know more: What is Tokenization on Blockchain?
Overall, Johnson expects traditional financial institutions to increasingly leverage blockchain technology. This integration into traditional investment practices aims to foster greater financial inclusion and encourage saving habits among younger generations.
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