Uncertainty is surging through global markets. The crypto market has never been especially stable, but what is happening now in the crypto world has the potential to dramatically impact the growth of decentralization and web3, which is critical for the industry as a whole. As a result, we decided to share our perspective on the situation and the potential repercussions of its rapid development.
Many people mix up tokenized assets with cryptocurrency. This is a big illusion. It is distributed ledger technology (DLT) or the blockchain itself that is being employed. The implementation of the concept of asset tokenization has been possible thanks to blockchain technology. Such a phenomenon as tokenization was unimaginable before its appearance.
The second essential difference is that tokenization allows a real asset to be shown on the blockchain. Not virtual, but real. A tokenized asset's value cannot be less than its true worth.
Real estate tokens of a villa in Hawaii, for example, will not be cheaper than the villa itself. Quite the opposite! The total value of the tokenized asset will increase by 25% - 40% as a result of factional ownership and the option of free secondary trading.
The third and most important distinction is that tokenization is a legal and operational process as well as a technical one. An issuer cannot create a token on the blockchain and then claim that it represents a tokenized business. Token legalization includes the complex process of legal justification and linking an asset to a smart contract. Without legal binding, it's just a fraud.
The final and possibly most complicated block is the process of the initial sale of such a tokenized asset. Securities experts are well aware of the regulations and restrictions imposed by regulators to protect investors in their respective countries. However, investors who have only dealt with cryptocurrencies are unaware of the regulations and see the world through rose-colored glasses that occasionally blush from what is happening in the market.
This is what financial regulators are for. Protect ordinary investors from fraudsters to whom public investors bring their savings in the hope of buying a Lambo and escaping to the Moon.
That is why we believe in asset tokenization rather than inflating crypto bubbles based solely on the assurances of the project's founders, many of whom are unable to pass the KYC, let alone be accountable to investors. Without consulting crystal balls or fortune tellers, one can see a clear trend toward the formation of regulatory rules for the cryptocurrency market.
The question is not whether or not the crypto market will be regulated, but when and to what extent it will be regulated.
The recent bankruptcy of one of the largest cryptocurrency exchanges, FTX, demonstrated not only a careless approach to finance, but also a total lack of any kind of decent management. The bankrupt FTX lost billions of dollars in investor funds, including deposits from ordinary investors in stablecoins. This undermines the crypto market's credibility and raises the issue of not just regulation, but strict regulation, equating digital assets with financial assets. The lack of proper transparency and financial schemes implemented by crypto-billionaires managing exchanges and custodian wallets do not inspire faith in even the most ardent crypto enthusiasts and decentralization supporters.
Understanding these sentiments and the course of market development, Stobox company continues to develop products and services directly related to tokenization and the legal circulation of digital assets.
Why Tokenization is a Safe Haven
Optimism is greatly enhanced not only by Stobox's position as an industry pioneer, but also by the fact that major players in the financial market are beginning to share their perspectives. For example, BlackRock CEO Larry Fink stated that "the next generation for markets, the next generation for securities, will be tokenization of securities."
Speaking at a New York Times DealBook event, Fink asserted that tokenization will provide "instantaneous settlement" and "reduced fees". Despite these benefits, he added that developing this type of technology would not disrupt BlackRock's business model. That is, they have already incorporated tokenization into their long-term plans, which serves as a model for the entire market.