Deloitte has authored a report recently that shares insights on the importance of tokenization in finance, its use cases, and the potential it could unlock in financial services.
The financial services industry has long seen disruptions and new technologies shaping its future. With blockchain technology, tokenization in finance has also become an important subject. The consulting and tax services firm Deloitte recently published a report on this topic. The firm explained how tokenization benefits could broadly fuel the financial services sector. It also listed a few challenges it could face along the way.
Earlier, the CEO of BlackRock, the world’s largest asset management firm, also rallied behind tokenization in finance. The executive, Larry Fink, listed a host of tokenization benefits. Meanwhile, the Deloitte report states how tokenization could unlock trillions of value in the financial services industry. On top of that, it mentioned how this value was just a drop in the ocean.
It claimed the value would accelerate much higher in other industries as well, including real estate, private equity, and others. The report described its use cases with digital tokens, stock and bond ETFs, and tokenized bonds. On the other hand, representing gold as digital tokens was another interesting use case it presented.
Besides, Deloitte said, “The foundations of a tokenized future are already in the works. Several financial institutions have launched proofs of concept (PoCs) and have joined industry consortia that are dedicated to developing rigorous cross-industry standards, practices, and solutions to explore the benefits of tokenization.”
Further, the report went on to describe the life cycle of a tokenized asset and its detailed benefits to the industry. Among the challenges, it mentioned privacy, regulation and risk management, tax and accounting, interoperability, and transformation of legacy systems. It noted how industry collaboration was important for progress.
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