Tokenization of Horse Syndicate Is Not a Fantasy, Says Industry Executive

Before there was blockchain, there was securitization. The financial world’s best effort at turning illiquid assets into tradable securities.

But with blockchain came tokenization, a huge step forward, according to Doug Leonard, CEO of Hifi Finance, a lending protocol built on the Ethereum blockchain. Leonard sees potential for tokenization of a broader variety of assets than some have ever imagined might be candidates.

Art Is a Tokenization Favorite

With tokenization, each token acts as a “share” or “stake” in an underlying asset. On a blockchain, these asset-backed tokens can be easily traded peer-to-peer, automating much of the management using smart contracts. Investors can buy, sell, or trade fractional ownership, without the financial intermediaries of a security.

For many, this functionality is a blessing. After all, those paying attention to the crypto industry’s battles with the Securities and Exchange Commission know that the sale of securities is highly regulated. You cannot, for example, offload your security at the drop of a hat on an exchange, as you can an NFT.

The end result? A financial marketplace that is instant, high-liquidity, low-cost, peer-to-peer, and 24/7. For most in the crypto industry, all this represents progress, and part of the reason the blockchain was invented: to take finance down from its ivory tower.

Leonard is clear that there is a limit to how many real-world assets you can turn into an NFT. Going forward, NFTs will likely only represent “individually distinct assets,” such as an individual property or piece of art. The key, he explained, is non-fungibility. Commodities, stocks, and even debt are not good examples of asset classes that fit the mold.

“I don’t think people are going to issue individual equity certificates as NFTs,” he said. “But anything fine art, houses, collectible cars – anything that would be a collectible could be an NFT.”

So far, one of the most popular categ

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Author: Josh Adams

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