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RISKS INVOLVED IN TOKENIZATION OF REAL-WORLD ASSETS (RWA) Part 2

6.Operational Risks:

Operations of an organization are important for the success of the product. Tokenization involves complexities in the operational aspect of a tokenized product. Operational issues viz., custody, security, and maintenance of tokenized products are highly complex in nature and would take a substantial amount of time and effort to produce better structure for the product.

7. Fraud & Security risks :

Due to permissionless and decentralized nature, there is a probability to commit fraud by stakeholders of tokenized products. The decentralized and pseudonymous nature of blockchain can attract fraudulent activities. Hack, theft, rug pull and other key issues are likely to get involved in a product that are tokenized by an organization.

8. Market Manipulation:

Due to liquidity issues, there is a probability that tokenized assets may be susceptible to market manipulation. This could include circular trading, wash trading, fake it till you make it type of schemes. This would drastically affect market players and traders that could permanently make them stay away from the markets.

These are the risks that are involved in tokenization of real world assets. An organization has to take care of these risks and would try to avoid or mitigate these risks to provide better products for the customers