Tokenisation for Alternative Assets

  • Security tokens — symbolise ownership or interest in an underlying asset
  • Utility tokens — provide access to specific rights and privileges to token holders
  • Exchange tokens — can be used as a mode of payment

Process of tokenisation

  1. Tokenisation

Benefits of tokenisation

  • Open access via fractionalisation — An asset can be divided into any number of smaller portions, lowering the bar for retail investors
  • Shorter settlement time — Enables 24/7 trading facility and real-time settlement unlike T+2 or T+3 settlements
  • Flexibility — An asset can be twisted and turned into infinite share classes
  • Data transparency — Data can be stored on blockchain
  • Creation of transformational value via operational efficiency — Drag-along actions, such as corporate actions, can be automated
  • Increased liquidity — Tokens could be easily traded in the secondary market, improving the overall liquidity
  • 2 June 2021: Singapore DBS bank announced its first security token offering using blockchain. This offering of approximately USD15m of digital bonds are expected to be traded on the DBS Digital Exchange (DDEx), which uses blockchain technology.
  • USPX is a token, valued at one-tenth of a share, represents an interest in SpaceX. Token holders can trade this on the secondary market (i.e., exchange platforms) such as order book or Codex.one.
  • December 2020: ICHAM Unicorn Opportunity Fund raised USD20m through an initial offering of its digitised securities on iSTOX, a capital market platform. iSTOX is backed by the Singapore Exchange (SGX) and Heliconia Capital Management, a subsidiary of Temasek Holding.
  • RealT (a real estate company in Florida) provides fractional real estate investing. The real asset is distributed across a finite number of tokens. Based on token share, owners collect their revenue share from the total income generated by the asset. The minimum investment in this tokenised asset is USD50.71.

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/