In Europe some securities are about to be tokenized in the form of tokens thanks to the blockchain support of Avalanche and the company Securitize.
The sandbox project will open the door to trading these products on secondary markets in Spain, with the intention of expanding horizons throughout the European Union and the US.
Let’s look at the details of the news together.
Summary
Securitize and the push to explore security tokens in Europe
On Thursday evening, asset tokenization company Securitize announced the launch of a project that aims to turn some European securities into security tokens, giving them an identity on the blockchain.
It is a pilot project that came following approval from Spain’s General Secretariat of Treasury and International Finance, with which it aims to expand the ways investors can approach financial markets.
The use of tokenized securities provides many advantages such as continuous tracking of securities and greater cost efficiency as well as offering a secondary channel of access for retail investors.
The shares, which represent the assets of Spanish real estate investment fund Mancipi partners, will be “transformed” into crypto tokens on Avalanche‘s blockchain, where trading will open in September.
The Layer 1 Cryptographic Network Foundation is one of the most committed entities in the tokenization context, with continuous developments on the tech side and a wide network of institutional players collaborating with it.
Securitize will have a 6-month period to experiment with this type of digital innovation, following which it could obtain licenses to operate regularly in Spain and throughout Europe.
Regarding the news, Securitize co-founder Carlos Domingo had the following to say:
“European businesses will be a major beneficiary of this innovation, giving businesses a new way to raise capital through primary capital raises, and obtain potential tax benefits and liquidity through secondary trading.”
Merging security and crypto: the views of big names in finance
The launch of the pilot project by the tokenization company Securitize represents a breakthrough for the way securities and crypto intersect, moving to provide fertile ground for the expansion of this innovative practice.
Until recently, the issuance of bonds and stocks on a blockchain was only a theoretical concept that drew on the inherent potential of distributed digital ledgers, but without anyone having developed anything concrete.
With the advent of Securitize, words are now becoming reality, at a time in history when crypto markets are becoming increasingly efficient and web3 companies are acquiring and improving and amplifying their skills and know-how.
Big players in finance are optimistic about the future of asset security tokenization and think that this narrative can attract more capital as well as provide incentives and benefits to the companies themselves.
In particular, Larry Fink, CEO of BlackRock, used strong words to describe the impact of this new trend, explicitly citing that:
“the next generation for markets, the next generation for securities, will be tokenization of securities.”
It is worth remembering that BlackRock is the world’s largest asset management investment fund, with a countervalue of assets under management of $8.6 trillion, hence such strong exposure from this company could prompt other players to follow in their footsteps.
In any case, other institutions such as Bank of America (BAC) have also expressed optimism about the future of the practice of turning securities into crypto tokens.
According to the multinational financial services company, tokenization could disrupt the current financial infrastructure and create a more efficient system.
Trying to project the industry into the future, this market could reach a value of $16 trillion by 2030, according to a Boston Consulting Group report.
The road for Securitize now seems to be downhill, after the company has already made a name for itself by tokenizing Hamilton Lane and KKR investment funds in the United States.
Avalanche’s investment in tokenized assets
As mentioned earlier, Avalanche and its team are at the forefront of tokenization of securities into crypto assets.
A few days ago, the project’s foundation announced the launch of an initiative called “Vista,” by which it intends to provide economic support to the decentralized ecosystem by dedicating a $50 million fund.
This money will be used primarily to purchase digital assets minted on Avalanche’s blockchain, prompting investors to start trading in this secondary market, which is more efficient and less expensive than traditional apparatuses where a middleman is always present.
Specifically on Avalanche one can find a variety of investment products that are or are in the process of being tokenized in the form of cryptographic tokens, among them are: bonds, stocks, credits, commodities and real estate.
Avalanche represents one of the most active Layer 1 networks on this niche market and intends to accelerate its growth through various projects and supports, such as “Vista.”
We are about to enter a new era in which all those practices that used to be handled manually such as asset issuance, settlement, transfer and administration are about to be handled by a blockchain.
We can only be excited about this!
