Coinbase emphasized in its recent report an increasing trend in financial asset tokenization. Particularly, tokenization has been gaining more attention in the United States due to the rising interest rates.
Tokenization is a rapidly growing trend, driven by the current high-yield economic conditions. The report notes that this trend is expected to continue to grow over the next 1-2 years. Financial experts predict that tokenization could revolutionize investments and asset trading.
Over the last six years, both individuals and major companies have become more proficient in using digital tokens, significantly reducing the risk of errors. At the same time, increasing bond yields have prompted individuals to seek new methods to generate additional income. The digital U.S. bond markets have grown sixfold this year, making access to these markets easier.
Government bonds and funds are also being tokenized
Initially used to represent less liquid assets on blockchain, tokenization is evolving to encompass the digitization of financial assets such as government bonds, money market funds, and repo agreements.
This transformation, not limited to cryptocurrencies, is leading major companies like JPMorgan to explore blockchain-based collateral agreements through platforms like Tokenized Collateral Network (TCN).
In 2017, the cost of tokenization was approximately 1.0% to 1.5%. However, in today's economic environment with nominal interest rates exceeding 5.0%, instant reconciliation has proven to be more capital-efficient. Additionally, 24/7 accessibility and transparent audit records support blockchain-based payments and reconciliations, enhancing this process. #tokenization