Michael Juul Rugaard, CEO of The Tokenizer reveals for The Paypers’ readers the ABC of asset tokenisation industry and security tokens
Most of The Paypers’ readers probably associate the concept of tokenisation with payment tokenisation. Conceptual confusion is unfortunate but sometimes hard to avoid, and in this case, a new tokenisation industry is currently emerging worldwide, next to the already established payment tokenisation industry. This new industry deals with asset tokenisation, and so does this article.
The asset tokenisation industry has set out to revolutionise capital markets by representing a wide range of asset types through pieces of computer code called tokens. Tokens on a blockchain can represent shares, bonds, derivatives, and all kinds of real-world assets. Companies, organisations, and asset owners can use Security Token Offerings – STOs – as alternatives to traditional means of raising capital.
The potential of asset tokenisation is enormous, and the industry is expected to become a global trillion-dollar business within the next 5-10 years. However, despite these promising prospects, regulatory uncertainty and lack of a regulatory overview across jurisdictions threaten to slow down the development. The challenge here is that since security tokens are real financial instruments, genuine securities, all the parties operating in the space need to be aware to comply with laws and regulations. But since this is a brand new area, many jurisdictions still lack regulatory clarity.
In July 2021, The Tokenizer, together with the Office for Financial Market Innovation (SFI), a part of the government of Liechtenstein, published a comprehensive report on the core regulatory challenges for the industry of asset tokenisation and security tokens. The report was a comparative regulatory analysis of nine countries – Austria, Canada, Germany, Hong Kong, Liechtenstein, Malta, Singapore, Switzerland, and the UK – all known as token economic…
