According to Cointelegraph reported on January 22, Jeremy Allaire, CEO of the cryptocurrency payment and payment company Circle, predicts that the securitization of assets through tokens will gradually become a reality in the next two to three years.
On January 21, at the World Economic Forum in Davos, Allaire and Neha Narula, director of the MIT Media Lab's Digital Currency Project, discussed how to tokenize liquid assets. Liquid assets can be Converted into cash and without losing value in a short period of time, it is easier to achieve, and it does not create new systemic financial risks.
Need to develop specific standards
Allaire and Narula first explained what blockchain tokens are and what they were developed for. Subsequently, they emphasized that asset tokenization could allow real estate, corporate securities and other financial assets to be traded on the secondary market.
Narula further pointed out that the use of such tokens will face many risks and challenges, which require relevant personnel to develop specific standards. Narula explains the need to actively regulate this area:
We want to protect consumers while ensuring market integrity. Issuers of assets should disclose specific information about those assets. We want to ensure that these assets are linked to how they perform in the real world.
Practical use case
When discussing the practical application of token assets, Allaire took an Indian farmer as an example, saying that this farmer may tokenize his future agricultural products or related property and provide it to the global market. More individual investors are interested in their products.
When asked how long it would take us to achieve the goal of tokenization of agricultural products, Allaire said that this vision is still far from us. To realize this idea, farmers must be able to accept and use stablecoins. This requires project applicants to be aligned with a range of regulatory and technical issues before they start using this payment method. However, this idea may become a reality in two or three years.
In discussing the prospects for the next 5 to 10 years, Allaire said that "the world of capital will be more like what we see today in Internet commerce". Narula said that the industry will see a large number of experimental projects within the expected time, some of which "will fail dramatically, but there may be some projects that have landed and become killer applications."