If "Asset Management 2.0" is centered around ETFs, then "Asset Management 3.0" will be: "tokenization"?

With its transparency and flexibility, ETFs are widely regarded as the "2.0 version" of the asset management industry. Now, tokens compatible with decentralized platforms are expected to drive asset management into the "3.0" era.

A recent column published in Sherwood News states that in the future, cryptocurrencies and traditional finance will merge, and according to analysts' predictions, this will unlock a multi-trillion-dollar tokenized securities market.

Specifically, what will the industry prospects for the "tokenization" of traditional finance look like?

The article states, this means that all assets such as stocks, bonds, and commodities will be converted into tokens (digital assets representing value or ownership in a decentralized system), which can be tracked on a unified digital ledger and managed through automated backend processes, with the platform operating around the clock, allowing all transactions to be completed in real-time.

Will Peck, the head of digital assets at WisdomTree, a financial innovation company that has launched more than ten tokenized investment funds, stated, tokenization allows anyone to "accurately access funds and confirm transactions when you need them":

"Think about it, what would it be like if investing were more closely linked to payments? Or you might think the idea of 'seamlessly transferring assets and value' is a good one."

From WisdomTree's process of "tokenizing" securities trading, the user access threshold and operational difficulty are almost zero: After registering on the WisdomTree app, users can directly trade tokenized funds using a debit card.

The Prospects of Asset Management "Tokenization": Mixed Blessings?

In fact, currently, well-known hedge funds including BlackRock and Janus Henderson have begun to experiment with "tokenization", launching U.S. Treasury fund token products in collaboration with cryptocurrency platforms. However, the entire industry is still in a very early stage.

At present, the prospects for asset management "tokenization" appear to be mixed.

Lucas Vogelsang, co-founder of the tokenization platform Centrifuge, stated that asset "tokenization" is expected to push financial products towards more ordinary investors, helping to promote fairness in the financial system:

"Think about IPOs, private credit, hedge funds... perhaps this will make the financial system a bit fairer."

Klaas Knot, chairman of the Financial Stability Board, also stated that asset "tokenization" will improve trading efficiency and provide investors with opportunities to enter new markets, but he also warned that "it will amplify many of the same vulnerabilities in traditional finance."

A related study from Deloitte indicates that "tokenization" could lead to greater accessibility, faster settlement, higher transparency, and lower operational costs. However, it may also result in financial crises occurring more quickly, financial fraud spreading faster, and smaller windows for monetary policy decision-making.

Currently, a specific dilemma of asset management "tokenization" is: tokens can be traded 24/7, but their underlying assets are linked to traditional financial operations, and investors still need to wait at least until T+1 to complete transactions. In addition, some individuals in the cryptocurrency field are also skeptical about tokenization.

Meltem Demirors, founder of Crucible Investment Company, believes that tokenizing bad assets does not make them better— for example, tokenizing real estate has not made it more liquid or attractive.

Demirors also argues that tokenization does not have substantial innovative significance for the crypto industry:

"Taking $50 billion worth of Bitcoin out of the circulating market and handing it over to a financial institution, which will charge a fee of 20 to 250 basis points to hold your Bitcoin, is not cryptocurrency innovation; it's asset management innovation."

Peck from WisdomTree similarly believes that financial companies are not looking to promote cryptocurrency through tokenization, but rather seeking a new way and new channel for asset management:

"I still believe that tokenization will be the future of asset management; I just think that the path to achieving this goal may differ from our initial thoughts."