Tokenization is not just a trend, but also a catalyst for profound changes in the way we understand and deal with financial assets.

By Cássio Krupinsk*

Asset structuring has been a challenging field, in which many agents have limited possibilities due to market obstacles, which end up favoring large corporations. The transition from independent agents to brokers, for example, faces significant barriers, from the high costs associated with the tax burden to the complexity of the structuring process.

However, a new approach is emerging as an enabler in this space: asset tokenization, which has been gaining traction around the world, particularly in Brazil. The country, in 2024, will host the G20 meetings and will precisely focus on the potential of this sector and the need for nations to act together in an interoperable system.

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In fact, at the first G20 meeting, the president of the Central Bank (BCB), Roberto Campos Neto, highlighted the potential of the digital financial system in transforming national economies. He pointed out that the development of Drex, the Brazilian digital currency, as a tool to enable tokenization within a regulated environment, is fundamental to “making the Brazilian financial system more competitive, modern and inclusive”.

In addition to Drex, as part of the financial system’s innovation agenda, Campos Neto stated that PIX played a fundamental role in the financial inclusion of millions of Brazilians, with 71.5 million new people actively using electronic transfers. Furthermore, broader access to digital payments has been linked to a decline in informal employment.

Currently, there are around 144 million individual users and more than 13 million business users. The number of monthly transactions carried out by around 800 participating institutions has already exceeded 4 billion.

This economic digitalization agenda, with tokenization as one of the main aspects, is not only a trend, but also a catalyst for profound changes in the way we understand and deal with financial assets. A recent Swift report illustrates growing confidence in the potential of tokenization, revealing that 97% of institutional investors believe the technology will revolutionize asset management.

Tom Zschach, director of innovation at Swift, emphasizes the importance of seamless connection between financial institutions to unlock the maximum potential of the area. This is a critical point, as integration with the entire financial ecosystem is essential for the success of the transition.

Jenny Johnson, CEO of Franklin Templeton Investments, highlighted during the Fortune Global Forum in Abu Dhabi the company’s high interest in tokenization, seeing significant potential in the financial sector more broadly. The company has been actively exploring this field, leading the creation of a tokenized money market to optimize atomic settlements and maximize emerging opportunities.

Global interest in tokenization is also evident in the massive issuance of around $4 billion in tokenized bonds in recent years. Official institutions such as the European Investment Bank, the Central Bank of Thailand, government entities in Hong Kong, Switzerland and the United States contributed significantly to this growth, representing more than half of issuances.

Here, Drex continues to advance and the new public consultation opened by the Central Bank on Vasps also addresses new paths for this regulated market.

The great advantage of tokenization lies in its ability to simplify asset structuring, reduce costs and democratize access to investment through fractional ownership. This approach not only creates new opportunities for independent agents and other entities, but also offers a more inclusive and efficient landscape for investors of all sizes.

In Brazil, it is possible to further transform this market, taking advantage of its opportunities and reaching, in 2024, the mark of R$2.2 billion in tokenized assets. By making tokenization accessible and effective, it empowers autonomous agents and other entities to transcend traditional barriers towards a new horizon of possibilities.

*Cássio Krupinsk is CEO of BlockBR, a fintech specialized in creating infrastructure to simplify the migration to tokenization, meeting the demands of a highly regulated environment.

Source: Future of Money