Luc Falempin, CEO and Founder of Tokeny Solutions, says the pace of tokenization is accelerating. He says the digital representation of securities by tokenization allows faster and safer identification of counterparties resulting in more efficient transactions. Luxembourg’s well-regulated financial ecosystem puts the Duchy at the leading edge of tokenization developments.
How do you tokenize the activity of financial institutions?
Firstly, your securities need to exist. We create tokens that are a digital representation of equities, funds, debt, commodities, image rights, SPVs, any legal entity, and cash as well. The digital infrastructure, based on blockchain, means there are fewer intermediaries involved in operations and transactions. Identification of investment counterparties and KYC will not involve the current, endlessly repetitive process for each transaction. Blockchain is very easy to service, administer, and transfer using a set of smart contracts and software allowing management of what you do on the network and control of your financial assets. A big focus of Tokeny is compliance. We have encoded compliance rules, bringing the complexity of compliance into the digital world.
How is Tokeny Solutions evolving?
We’ve seen rapid progress in the tokenization industry. In the past 24 months, we have scaled up from a startup and signed up different types of clients and partners – not just the small players, now it’s also large financial institutions on different continents and different regions. Our team grew: We now have 40 people. A couple of years ago there was a buzz around tokenization. Many of the banks lost a lot of time and money experimenting with their own decentralization silos. Now blockchain technologies and networks have evolved. It’s much easier to launch private blockchains or use public blockchains which are cost-efficient, fast, and decentralized. If you are not happy with this blockchain, you can migrate to another in five minutes.
What is the future of tokenization?
BlackRock did a favor for our industry when they said the future is all about tokenization. If we look 5 or 10 years ahead you will be able to buy a fund in the same way as you can buy real estate in Barcelona on blockchain. It will boost the market for alternative assets. The difference between liquid and illiquid assets will blur. The current inability to collateralize assets will disappear as assets become digitalized tokens on blockchain technologies. It will be much easier to fractionalize assets. You will be able to create customized portfolios of different assets programmatically. Because Luxembourg is a great place for securities with its advanced regulatory ecosystem, it will be a great place for tokenization. We need a bit more promotion, and a bit more education to recommend that people come to Luxembourg to tokenize.
Quotation: “If you are not happy with this blockchain, you can migrate to another in five minutes”
