Tokenization generally refers to the representation of assets (or ownership rights to such assets) on a distributed ledger. For example, the process may involve securitising a real world asset (e.g. a piece of property), and selling economic interest in such assets by tokenising the interests on a blockchain. This allows for the creation of an immutable register of ownership, as well as the distribution of interest under existing securities law in a way that is enforceable in the relevant jurisdictions.
In recent years, innovation within this space has blossomed – the range of products which can be represented on a blockchain is ever-expanding, including assets such as debt instruments, bonds, real estate, commodities, and other real world assets. Financial institutions across the world are increasingly exploring the opportunities offered by this technology, and in 2024, it is expected that many experimental projects will mature from pilot or testing phases to production.
Trust, however, is paramount to the adoption of the technology. In the world of cryptocurrencies such as bitcoin, trust lies solely with the technology itself, where decentralized systems eliminate counterparty risks and do away with the need for intermediaries – however, in the world of tokenization, trust also stems from the presence of credible and trustworthy partners, clear legal and regulatory frameworks, and the ability of the technology to operate alongside “traditional” ways of working.
On 30th November 2023, we gathered digital asset service providers, financial institutions, regulators, and Hogan Lovells Partners to Atlantic House for our annual Digital Asset Summit. One of the panel discussions during the summit focused, in particular, on digital trust in the context of tokenization, providing a deep dive into current uses cases, the opportunities offered by tokenization, the enablers and barriers to adoption and digital trust, and the need for interoperability.
Hogan Lovells Partner Bryony Widdup led the panel discussion on the tokenization of real world assets. She was joined by panelists Katey Neate (BNY Mellon), Annabelle Bernal (Société Générale FORGE), Anthony Woolley (Ownera) and Graham Rodford (Archax).
Watch the full panel discussion: