💡What is the problem?

Regulation, Compliance and Tokenisation.

Tokenisation of real world assets is hard!

Despite the recent, massive uptake of digital currencies and blockchain-enabled cryptocurrencies, it is still extremely difficult to fractionally own or tokenise real world assets.

Regulation and Compliance

As the cryptocurrency market continues to evolve, regulators around the world are starting to take a closer look at the risks and potential dangers associated with unregulated, decentralised finance (DeFi) investment products. While permissionless blockchains offer certain benefits, such as greater transparency and the ability to bypass intermediaries, they also present significant risks to investors. These risks include fraud, money laundering, and other types of illegal activity, as well as the potential for catastrophic loss due to hacks or other security breaches.

As a result, it is no longer advisable for companies to offer unregulated DeFi investment products on permissionless blockchains.

Instead, companies need to focus on creating robust investment products that are built on legal compliance and, by default, include measures such as know-your-customer (KYC) and anti-money laundering (AML) requirements.

Tokenisation

Cryptocurrencies have faced several legal and regulatory hurdles when it comes to tokenizing real-world assets. One of the main challenges is that the current legal framework is not well-suited to handle the unique characteristics of cryptocurrencies and blockchain technology. This has made it difficult for companies to navigate the complex regulatory landscape and obtain the necessary licenses and approvals to issue security tokens.

Another challenge is the lack of standardization in the cryptocurrency market. There are currently no widely accepted standards or guidelines for tokenizing assets, which has made it difficult for investors to evaluate and compare different investment opportunities.

In addition, there have been concerns around the security and custody of digital assets. Tokenizing real-world assets requires a high degree of security and trust, as investors need to be confident that their assets are being stored and managed properly. However, there have been several high-profile hacks and security breaches in the cryptocurrency industry, which have raised doubts about the safety and reliability of digital asset custody.

Finally, there is also the issue of liquidity. While tokenizing real-world assets has the potential to unlock trillions of dollars in currently illiquid markets, it is still unclear how easily these assets can be traded and exchanged on cryptocurrency exchanges, and how they will be valued in the marketplace.