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Marin le Corre

Financial adviser - Investor - Former Merrill Lynch Vice-President

I see a future with Asset Tokenization! 27 Aug 2018

I see a future with Asset Tokenization!

Tokenization of assets on Blockchain and Smart contract is a solid trend of 2018. It seems that everything intend to be tokenized from Art, Gold, Real Estate, Solar panels....

Tokenization refers to the digitization of an asset. These digital “shares” are called tokens. When the asset is fully funded, the smart contract issuer is distributing to investors Proof-of-Asset (PoA) tokens equivalent to the amount they invested.

Most Proof-of-Asset (PoA) tokens, are transacted on the Ethereum blockchain (ERC-20 compliant). As such, in principle they are transferable. Owners will be able to store them in their Ethereum wallets and eventually if they are listed, trade them on secondary markets.

These Tokens known as Asset-Backed Token (ABT) should represented most of the economic benefits of legal ownership. Holders should have: Voting rights, access to assets in case of bankruptcy and should legally be entitled to the profits of the underlying asset to be paid out in Fiat or Crypto.

In 2018, several Asset-Backed Token ICOs’ called Token Generation Event (TGE) or Initial Token Offering (ITO) have been promoted with mixed result. Possibly as investors doubted about the:

1)      Proof of Asset;

2)      Allocation of investors funds;

3)      Dividend /profit distribution policy;

4)      Assets / Sponsors capacity to deliver a yield.

This is the beginning, and I believe we will see more experienced sponsors coming to the market in the next months, as blockchain and smart contract can revolutionize the multi-billion Asset-Backed market.

The expansion of Asset-Backed Token will also permit retail investors to invest in long-term lucrative assets today only accessible to financial institutions. Crowdfunding platforms may perform the due diligence and market these Tokens. More regulated custodians will also be needed. But at the end, It will be easier and cheaper for investors to purchase these assets, by removing geographic restrictions, unnecessary fees (by cutting out middlemen), and minimum amounts.

On the other hand, institutional investors can exit their equity at a lower cost and much faster than today (transactions can be made almost instantly, 24/7)! A more liquid market means more equity investments – and yes Equity is what we need in a world of growing USD rates — Exactly what is required in Aviation and Renewable in the next years for a greener world.

I foresee superior opportunities on large commercial assets today only on hand of Institutional investors like Buildings, Aircraft, Power Plants... billion-dollar opportunities which as soon as Asset-Backed Token are recognised as securities will see a horde of investors jumping on it.

High yield commercial assets like Grid connected renewable power plants, Operator leased GSM Towers or Airlines leased commercial aircraft should attracted superior interest as they are restricted in their access and need further managerial expertise.

Undoubtedly, I see a future!

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