Asset tokenisation and what might prevent the broader adoption

Asset tokenisation has been a hot topic for quite some time now, especially since the rise of stablecoins. One prime example of asset tokenisation is the emergence of stablecoins, such as tokenised U.S. dollars. The total supply of these tokens has surged to approximately US$150 billion, a significant increase from virtually nothing just five years ago.

?

With this established product-market fit, the focus has shifted to a new question: If tokenising US dollars as stablecoins has proven to be successful, why aren't we seeing more asset tokenisation initiatives, why not extend this capability to other currencies or assets on the blockchain? This lies at the heart of the tokenisation trend's ambition.

?

So what are the primary obstacles preventing the broader adoption and scaling of asset tokenisation?

• Regulatory Uncertainty: Regulations around asset tokenisation vary widely across jurisdictions and can be complex. Uncertainty about compliance requirements and legal frameworks can deter potential issuers and investors
• Liquidity and Market Depth: Unlike stablecoins backed by fiat currencies, other assets may lack liquidity and market depth, making it challenging to tokenise them effectively. Illiquidity can lead to price volatility and reduced investor interest.
• Custody and Security: Ensuring the safe custody of tokenised assets is crucial but can be complex, especially for physical assets like real estate or commodities. Security concerns, including the risk of hacking and fraud, need to be addressed effectively.
• Interoperability: The lack of interoperability between different blockchain networks and token standards can hinder the seamless transfer and trading of tokenised assets. Standardisation efforts are ongoing but may take time to mature.
• Investor Confidence and Education: Many investors are still unfamiliar with asset tokenisation and may perceive it as risky or speculative. Building trust and providing educational resources are essential for broader adoption.
• Market Fragmentation: The asset tokenisation space is fragmented, with various platforms and protocols competing for market share. Consolidation and cooperation among industry players may be necessary to drive scalability and efficiency.

Addressing these challenges will require collaboration among regulators, industry participants, and technology developers to create a robust ecosystem for asset tokenisation. Despite the obstacles, the potential benefits of increased liquidity, accessibility, and efficiency make asset tokenisation an area of significant interest and innovation.

?? What are your thoughts on this??

?? Reshare if this was helpful.

?

?