Ever imagined owning a fragment of the Eiffel Tower or perhaps a portion of a prestigious downtown skyscraper? It might seem like a flight of fancy, but what if it was as tangible as holding shares of major companies like Tesla?
With the growing buzz around real-world assets (RWAs) in sectors such as real estate, FinTech, precious metals, and even credit loans, such ownership notions are inching closer to reality. And thanks to blockchain technology, RWAs are redefining the way asset ownership is being perceived.
RWAs represent genuine and concrete pieces of tangible assets encoded “on-chain” and made digitally trackable. According to Boston Consulting Group, the market for tokenising illiquid assets as RWAs could potentially reach up to US$16.1 trillion by 2030.
Real estate’s digital evolution
Real estate has long faced challenges with intermediaries, costs and legal complexities.
Today’s landscape is transforming, with real estate emerging as a key sector for RWAs. They signify an evolution towards enhanced multi-jurisdictional efficiency and access. “With real estate tokenisation, properties transform into blockchain-enabled assets, simplifying transactions and expanding access. New forms of access include fractional ownership, allowing micro-investments among a larger market audience,” says Erik Ramos-Paice, Co-Founder and Partner of Taiboku Capital.
This advantage extends beyond operational ease, bringing a transparent renaissance in real estate deals. From the inception of smart contracts to the crescendo of digitised ownership transfer, important transactional metadata is etched onto blockchain networks for data integrity.
Yet, every innovation has its maze. Nations are still crafting their legal RWA guidelines – from the asset’s nature to taxation rules and from AML standards to KYC compliance. International trading of tokenised real estate adds another layer, demanding synchronised compliance amidst diverse jurisdictions.
RWAs: A new era for precious metals
The precious metals sector has often been enshrouded in ambiguities related to provenance, ethical sourcing, and supply chain management. Now, the process of RWA tokenisation holds the potential to transform these industry problems into working solutions.
While this doesn’t necessarily simplify the physical movement of the assets, it allows for far more efficient trading in terms of their digital representations. This ensures diligent tracking of blockchain-based supply chains while preserving tangible asset value.
Recognising the transformative power of RWAs, Ramos-Paice states, “The precious metals industry is starting to emphasize mandated reports strongly. These reports, if generated with the help of RWA technologies, can add an additional layer of assurance and traceability for auditors.”
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In the backdrop of this evolution, supply chain platforms like EMCO Network are exploring the intersection of precious metals with blockchain and RWAs. These platforms, in their quest to prioritise transparency, aim to address long-standing industry challenges of authenticating the origins of mined gold sources. This ultimately aids in enforcing ethical supply chain practices, boosting verifiable accounting standards, and mitigating sophisticated fraud loopholes.
When problems arise during the supply chain journey, companies can better pinpoint potential problems rather than trying to painstakingly trace back the source of error with legacy tracking systems.
Compliance tech: A critical driver for RWAs
Merging tangible assets with digital counterparts demands a strong compliance framework. Consequently, this calls for a unified approach to ensure smooth global acceptance of RWAs – from both the legal and technological aspects.
Proper governance models are crucial when implementing RWA compliance. This can be achieved through a network of validators or a council of trusted members who collaboratively vote in the decision-making aspect of tokenised assets.
By adopting this approach, it heightens the transparency of how RWAs are transacted. Haven1, a purpose-built (EVM compatible) blockchain providing a secure environment for financial transactions, is one such example that empowers businesses with regulatory frameworks that bring in best practices from traditional finance. Equipped with the right governance tools, auditors and regulators gain improved access to data surrounding RWAs, streamlining enterprise-scale compliance efforts.
Unlocking this potential means deepening cross-jurisdictional communication among regulators. Beyond just dialogues, it involves shared regulatory workshops, collaborative sandboxes for testing products across borders, and education geared towards regulators. A unified digital platform for worldwide regulators could further streamline these interactions, ensuring a cohesive approach to RWAs.
Major shifts in global asset liquidity
RWAs are likely to play a pivotal role for enterprise businesses and their end customers.
For businesses, RWAs are forecasted to provide operational efficiencies, open up new revenue avenues, and foster seamless global collaborations. Traditional sectors will likely witness rejuvenation as tokenisation strategies introduce novel means of asset management and trade.
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On the consumer side, the implications are equally profound. RWAs could democratise asset ownership, allowing more individuals to tap into micro-investment opportunities that were once out of reach. This means that an array of assets, including fractionalised property or rare precious metals, could become more accessible – and hence liquid.
While the benefits are manifold, the intersection of traditional and digital assets also brings forth questions about emerging market dynamics and the practical synergy between the two realms.
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