One of the characteristics of the new technology is that, at first, it is often worse than the one that replaces. I remember sitting in my apartment at some point at the end of the 1990s and spending a weekend dragging my CD in MP3 only to get a hard traction accident and lose all my data on Sunday night. I had a moment “Why am I doing this”, and many of the first buyers of tokenized shares feel in the same way? And then I repeated the process the next weekend, because I am learning slowly.
If digital music had begun and ended with Napster and my PMP-300 river (because Iykyk), we could all forget it. But he didn’t. It improved and now it is just what we do. It is also the pattern that we will see with the tokenized actions.
Tokenized actions today are a remarkably lower product for the traditional market offer. I looked through the terms and conditions of eight different services in the chain that offer tokenized assets to understand what is available. Most are available in the EU, one is available worldwide excluding the US. And one is available only in the US.
While all these can be considered good efforts, most of the platforms offered by these actions restrict them in many ways that are tedious and show that the underlying infrastructure is not really crypto-national. The restrictions that exist so far seem to be the result of efforts to comply with the regulations or deficiencies not yet defined in the underlying markets (as the lack of weekend hours).
Read more: Paul Brody – Ethereum has already won
For most platforms, trade is available 24 hours a day, but only five days a week. Many tokens carry geographical restrictions and “know their clients” (KYC)/Transfers restriction permits. These tokens offers rarely have voting rights, some do not allow dividends, and most do not allow tokens to be used in any decentralized financing (Defi) services either.
The trade of shares in the chain today is rudimentary and if it ended here, it would be a small market restricted to a limited number of customers that do not have access to the main capital markets. Slow but sure, however, I think we will overcome many of these limitations.
Limits surpassed
Take Kyc, for example. Although it is unlikely that the KYC rules disappear, since they are standardized, instead of being restricted to trade with a small group of people who use exactly the same supplier and a partner who executes the same KYC process, all small liquidity groups will become interoperable, effectively becoming a larger liquidity group. And with a deeper liquidity, it will come to market manufacturers willing to support trade 24 hours a day, 24 hours a day, 24×7 without any price fine. The increase in regulatory maturity will probably allow voting rights, dividends and automation of tax withholding as well.
All these steps, over time, will negotiate tokenized actions comparable to the negotiation of traditional actions. If we return to musical analogy, that’s fine, but it’s just a convincing reason to change. It will appeal to those who have limited access to the actions today, but if you have chain assets and verified KYC, it is likely to be good, you can already get a bank account and a brokerage account. This means that parity with existing offers will not be convincing.
We can see where the offerings in the chain go, and it is more than parity. The recent Robinhood announcement of a layer 2 in Ethereum included the promise of tokenized access to private companies such as Spacex and OpenAi. Beyond that, the ability to plug in assets in the chain to the services defi and use them as a guarantee or provide them for an additional return will bring many users to the market.
Finally, I think there is a potential to really transform corporate governance. Despite several hundred years of experience, the governance of the shareholders leaves much to be desired. Many owners do not exercise any of their rights. It is not surprising since we can barely follow the rhythm of real politics. But, with intelligent contracts, the ability to delegate their voting rights to the experts that he trusts opens a completely new world of informed government.
Early adoption is often driven by users with unique needs and risk tolerance. This is a perfect example of the entire cryptographic ecosystem, including users who have accumulated assets outside the entire traditional financial system.
But, over time, we will get “because we can” something much better. And, when that happens, the current $ 3-4 billion in cryptographic assets and a few hundred one billion in Stablecoins will be eclipsed by the $ 200+ billion in shares and bonds that can come to the chain. It’s just a matter of time.
Discharge of responsibility: These are the author’s personal opinions and do not represent EY’s opinions.
