SIBOS on Tokenization: fractionalization, atomic settlement, public blockchains – Ledger Insights

Yesterday during a session at the SIBOS banking event, the benefits and opportunities of tokenization were explored. Deutsche Börse Clearstream’s Jens Hachmeister views the advantages in two ways. On the one hand, tokenization enables efficiencies and cost reduction. And it also provides new business opportunities.

The topic of tokenization enabling fractionalization and “democratizing” access to assets was discussed. “Just because you represented an asset as an ERC 20 token, you didn’t suddenly bring democracy into finance. That’s just good marketing,” said Yuval Rooz of Digital Asset. 

He wasn’t criticizing fractionalization per se. Instead, he emphasized that technology and automating processes bring workflow operational efficiencies. And it is those cost savings that enable fractionalization.

As an aside, many of these fractionalized assets were previously only available to institutions and are now accessible to wealthy accredited investors, not the general public. So rather than democratizing access as financial inclusion, the token sellers are tapping into a highly lucrative investment pool. For example, individual accredited investors in the United States own $82 trillion in assets. 

Goldman Sachs’ Rosie Hampson had a nuanced take. “I think fractionization is as much about mobility as it is the market access.” In other words, rather than assets being stuck in one place, they can be traded or moved faster. 

Intraday…