What benefits does tokenization of traditional assets bring?

Tokenization is changing the way how people invest or fundraise. It is transforming real-life asset into a new digital form with unique set of benefits. But what is tokenization and why digital assets can become a great alternative to traditional?

Tokenization, simply put, is the act of splitting traditional assets into many virtual pieces and replacing them with so-called “tokens” stored on the blockchain. Such tokens can represent both material assets (precious metals, goods, etc.) or non-material (equity, bonds, shares, etc.).

Issuing digital assets as an investment vehicle has several benefits:

1. Fractional ownership – traditional assets such as commercial real estate and fine art are usually defined by a high price per unit. Digitalization of an asset offers an efficient path to fractionalize its value.
2. Enhanced trust – the transparency and immutable nature of distributed ledger technology as well as asset programmability reduce the reliance on a single party or authority to execute transaction and reduces counterparty risks.
3. Programmable compliance – many aspects of the compliance process (such as KYC/AML) can be automated within the architecture of an asset or underlying protocol with the application of a world leading KYC/AML customer on-boarding and monitoring systems.
4. Accessibility – a digital/crypto wallet can be opened online almost instantaneously, without the need to go to a bank or open an account with a broker, this makes digital assets more accessible than traditional financial market instruments. This is why digital assets have become to many the first financial investment in their lifetime.
5. Improved transferability – reduced transaction costs by removing intermediaries from the transaction settlement processes.

Tokenization has a great potential to transform landscape of traditional markets with proper ecosystem, infrastructure and regulation in place. Almost anything these days can be tokenized. But for serious investors who are looking to receive substantial returns on the funds they have put in, it is important to invest in instruments backed by tangible and solid assets.

VNX provides tailor-made solutions for tokenization of various assets which combine technical infrastructure and integrated services (such as finance, legal, compliance, etc.) to make offerings successful. VNX end-to-end tokenization platform can facilitate the whole life cycle of digital securities, including investors’ onboarding, investor communications and information disclosures, structuring, management of payments in fiat and crypto, issuance and post-transactional management.

Check out our current digital asset offerings here.