Tokenisation of Real Assets: The New Financial Paradigm

Tokenisation of Real Assets: The New Financial Paradigm

The financial world is constantly evolving, and the tokenisation of real assets is emerging as one of the most disruptive paradigms of recent years. This technology, based on the blockchain, makes it possible to convert tangible assets such as real estate, works of art or even traditional financial assets into digital tokens that can be easily traded on secondary markets. 

Asset tokenisation allows investment in real estate, art and other assets. It offers democratisation and liquidity, in that it makes it possible to fragment assets that were previously only accessible to powerful economies, funds, etc., but at the same time presents regulatory and security challenges.  

However, if tokenisation offers advantages, the difference is not in the tokenisation but in the DLT technology on which the tokens run. DLT, and not so much tokenisation, is the key to the new financial paradigm. 

Opportunities for Entrepreneurs and Startups

Tokenisation of real assets opens up a universe of possibilities for entrepreneurs, digital entrepreneurs and startups. This innovative technology, based on the blockchain, makes it possible to convert tangible assets such as property, works of art or even traditional financial assets into digital tokens. These tokens can be easily traded on secondary markets, democratising access to investment and transforming the way projects are financed. 

Democratising access to investment: Tokenisation allows small investors to participate in the ownership of assets that were previously only available to high net worth individuals. This opens the door to greater participation in the financial market and democratises access to diversified investment opportunities. 

Increased liquidity: Digital tokens can be traded in secondary markets 24 hours a day, 7 days a week, which increases the liquidity of assets. This facilitates the inflow and outflow of investments, reduces transaction costs and provides greater flexibility for investors. 

Cost reduction: Tokenisation can significantly reduce the transaction costs associated with buying, selling and managing assets. This eliminates the need for intermediaries and reduces fees, benefiting both investors and token issuers. 

Increased transparency: Blockchain technology enables transparent tracking of asset ownership and management. This increases investor confidence and reduces the risk of fraud by providing a public and immutable record of all transactions. 

New business models: Tokenisation opens the door to new business models and funding opportunities for startups. It makes it possible to create decentralised investment platforms, launch crowdfunding projects more easily and develop new ways of tokenising intangible assets such as intellectual property. 

In short, the tokenisation of real assets offers endless opportunities for entrepreneurs and startups to explore new markets, raise capital in innovative ways and scale their businesses in disruptive ways. 

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Legal Aspects of Blockchain, Tokens and DLT Technology

Regulation (EU) 2022/858 of the European Parliament establishes a pilot scheme for market infrastructures based on decentralised registration technology (DLT)

Legal Challenges and Considerations 

While the tokenisation of real assets presents a landscape of opportunities, it is also important to consider some challenges and risks that should be carefully assessed before venturing into this new financial paradigm. 

Regulatory framework: The regulatory framework for asset tokenisation is still developing, which creates legal uncertainty. Different countries are adopting different regulatory approaches, which may make it difficult to operate in a global market. 

Volatility: Digital token markets are still relatively new and can be volatile. The price of tokens can fluctuate significantly, which represents a risk for investors. 

Security: The security of digital tokens is a critical issue that needs to be carefully addressed. Hackers and cyber attacks are a real threat, and robust security measures need to be implemented to protect tokenised assets. 

Consumer protection: It is necessary to ensure that investors have access to clear and accurate information on the risks and benefits of tokenisation. Token issuers must comply with transparency and consumer protection rules to avoid fraud and abusive practices. 

Taxation: Tax authorities are still defining how to tax gains from asset tokenisation. It is important to be aware of the tax obligations in each jurisdiction to avoid legal problems. 

Asset tokenisation can have complex legal implications in property, contract, securities and commercial law. Expert legal advice is essential to navigate the regulatory framework and minimise legal risks. 

Conclusion

At ILP Abogados, we have a team of lawyers highly specialised in blockchain technology and asset tokenisation. We offer comprehensive advice to entrepreneurs, digital entrepreneurs and startups wishing to take advantage of the opportunities offered by this new technology.  

It is important to emphasise that law is not a commodity. Choosing a lawyer should not be based solely on price. It is essential to look for a lawyer who has experience in the specific sector in which advice is required, and who can offer a personalised service tailored to the client’s needs. 

At ILP Abogados, we are committed to the success of our clients. If you are interested in real asset tokenisation, we invite you to contact us for a free consultation. We will help you understand the opportunities and risks associated with this technology, and guide you through the process of tokenising your assets. 

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Startups, Tokens and Blockchain

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