Asset tokenization is making a significant impact on capital markets. Experts predict its market could grow from $600 billion today to an astonishing $16 trillion by 2020’s end. Yet, according to an article on crowdfundinsider.com, infrastructure seems to be the missing link slowing this growth.
Tokenization, the process of transforming asset rights into a digital token on a blockchain, is seen as a major development in capital markets. Nevertheless, for it to function effectively, it requires a robust infrastructure, which currently seems lacking.
A key challenge is the private markets’ liquidity gap. Tokenization needs to address this to fully flourish. Done right, it could create new opportunities for investors and businesses. Yet, achieving this is fraught with obstacles that must be overcome.
Alternative Trading Systems: Could this be the answer?
Alternative Trading Systems (ATS) could be a possible solution. These non-exchange trading venues match buyers and sellers to find transaction counterparties. They might provide the necessary infrastructure for tokenized securities.
Operating 24/7, ATS networks offer constant liquidity for tokenized assets. They also provide access to global markets, potentially creating more significant investment opportunities. Thus, ATS networks could play a crucial role in bridging the current liquidity gap in private markets.
Yet, for ATS networks to work, they must cater to the unique needs of tokenized assets. This includes handling their immutability and their operation on a decentralised network.
The challenge lies in building an infrastructure capable of accommodating these needs while ensuring a secure and efficient trading environment. It’s a daunting task, but a crucial one to realize the potential of tokenized assets.
North Capital, a firm specializing in financial technology solutions, is striving to bridge this liquidity gap. Their focus on building a robust infrastructure for tokenized assets could potentially trigger the next big evolution in capital markets.
