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- 1 Tokenized assets are showing momentum in the crypto space.
- 2 Increase in stablecoin products and focus on regulations are some predictions made for RWA.
Tokenization of real-world assets helps in management and funding. An increasing number of industries prefer tokenizing real-world assets. It allows fractions of high-value assets to be traded. The regulations of the RWA tokens should be made more clearer. Big institutions are inclining towards tokenizations.
Some of the predictions for real-world assets are discussed below.
Proliferation of Stablecoin Products
An increase in stablecoin products will be seen to challenge the market dominance of USDC and USDT. for this alternative form of collateral to back a stablecoin. Also provides additional incentives to users and introduces novel compliance frameworks.
Novel Asset Tokenization
Asset tokenization is a unique way in which investment opportunities flourish by allowing fractional ownership. It also facilitates enhanced traceability. In 2024, the tokenization of the asset is expected to increase.
Real world assets like land, property are tokenized and fractional ownership will increase its affordability.
A Shift Toward the Buy-side
This idea of using blockchain for facilitating lending is not a competitive differentiator and RWA.xyz Directory identifies at least 40 tokenization protocols capable of facilitating onchain private credit transactions.
Kevin Milao of Block Tower Credit argued that Block Tower was the first asset manager that built on the RWA strategy that predicts the needs of capital providers rather than the supply of assets. This strategy is successful with the Block Tower.
MakerDAO has committed an aggregate of $1.35 Billion to Block Tower Credit through multiple investment vehicles.
From this success, it is expected that the platforms will emphasize the needs of capital providers.
Regulatory Focus and Guidance
The ICO boom of 2017-2018 let the early crypto asset regulation emerge. Regulators from all over the world came up with new frameworks and novel methods of regulating crypto.
Mostly, tokenized assets are not covered by these regulations and so occur in regulatory gray areas. It is still an uncleared area and tailored regulation is needed. The off-chain asset component typically fell under existing financial laws.
Consequently, regulators have to provide more clarity to the institutions. In 2023, many countries like Hong Kong, the United Kingdom, Singapore among others attempted to regulate tokenization. This is expected to continue in 2024.
Institutional Tokenization Heats Up
Big institutions are showing interest in tokenization. In 2023, multinational financial institutions are launching tokenization products that highlight the interest of institutions in blockchain technology. This growing trend is expected to continue next year as well.
The newcomers or new institutions joining the field want to compete with existing institutions and so they feel a sense of determination to explore tokenization. This way, they can keep pace with early movers. Hence, a rise in institutional tokenization is expected.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
