Circle CEO: Asset tokenization will be more realistic in two-three years

  • MIT Media Lab exec spoke about how tokenization can make liquid assets more accessible without creating new systemic financial risks.
  • The exec also said that blockchain-based tokens would enable the trade of assets like corporate securities on secondary markets.

The CEO of crypto payments company Circle, Jeremy Allaire, believes that asset tokenization will become much more realistic in the next couple of years. Recently, at the World Economic Forum in Davos, Allaire and Neha Narula spoke about how tokenization can make liquid assets more accessible without creating new systemic financial risks. Neha Narula is the director of the Digital Currency Initiative in the MIT Media Lab. 

Both the speakers started out by explaining what blockchain-based tokens are and the purpose of its development. They highlighted that these tokens enable assets like corporate securities and real property to be traded on secondary markets. Narula also spoke about the risks that are associated with these tokens, which require the development of certain standards. 

Narula explained the need for positive regulation as:

We want to have consumer protection, we want to have market integrity. People who are issuing assets should disclose information about what exactly those assets represent. And we want to make sure that those assets are really tied to their representation in the real world.

While discussing the real-world use cases of tokenized assets, Allaire gave an exam of an Indian farmer who might tokenize his future yield and offer it on a global marketplace, where an investor would communicate their interest in the product. Upon asking how far we are from the realization of the idea that a person could securitize his crop yield through tokenization, he responded by saying that it’s a long shot. To bring this idea into action, the above farmer should be able to accept and use a stablecoin. However, according to Allaire, the idea will become more realistic in two to three years.

Allaire said that “the world of capital will look much more like the world that we see in Internet commerce today,” while discussing prospects for the next five to ten years. Narula suggested that during the projected period the industry will see a lot of experimentation, some of which “are going to fail dramatically, but there might be a couple that really and truly do expose something missing from the real world.”

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