Is the digitalisation of real-world assets likely to affect the work of the corporate treasurer? An emphatic yes, says Rafael S. Lajeunesse, CEO and Founder of digital investment banking platform, ReachX. He delves into the story so far and sets out his stall.
In the ever-evolving landscape of finance and investments, one phenomenon has been making waves and reshaping the strategies of corporate treasurers: the tokenisation of real-world assets (RWAs). This groundbreaking innovation is not merely a buzzword; it’s a transformative force that’s altering the way corporate assets are managed, traded, and leveraged for growth.
Let’s start with the basics. Tokenisation involves the conversion of RWAs into digital tokens on a blockchain, providing fractional ownership and opening new avenues for investment. The process brings liquidity, efficiency, and transparency to traditionally illiquid assets. Corporate treasurers are now presented with an opportunity to diversify their investment portfolios and enhance the liquidity of their existing assets.
Traditionally, large corporates held vast assets, often in the form of real estate or bonds. However, tokenisation has democratised access to these assets. A paradigm shift is occurring, with corporates recognising the potential benefits of embracing tokenisation in their treasury management.
For instance, Siemens, a global industrial powerhouse, has ventured into the realm of tokenisation by issuing a $63m digital bond in 2023 on the Polygon blockchain. This move aims to streamline its financial processes and explore new market opportunities. This is not an isolated case; more corporations are joining the wave, understanding that tokenisation can revolutionise how assets are managed and traded.
Even US Treasury Bills (T-Bills) are tokenisable. In partnership with DBS Bank and SBI Digital Asset Holdings, J.P. Morgan has been actively involved in the Project Guardian initiative run by the Monetary Authority of Singapore (MAS). This project utilises liquidity pools on the Polygon blockchain to transact tokenised Singapore and Japanese government securities bonds. This collaborative effort showcases the potential for large-scale tokenised transactions involving institutional players.
Corporates are also leveraging tokenisation platforms such as OpenEden. This platform provides access to on-chain US T-Bills, enabling stablecoin holders to mint TBILL tokens. As of January 2024, the OpenEden TBILL Vault offered a 5.31% weighted average yield to maturity (gross) of the Vault’s US Treasury Bills on-chain portfolio.
Growing ecosystem
Tokenisation is not limited to a specific sector; it’s a thriving ecosystem that continues to evolve, with platforms such as Polytrade, Goldfinch, and RealT expanding the scope of assets available for fractional ownership.
- Polytrade’s focus on invoice factoring: Polytrade focuses on decentralised trade finance, specifically invoice factoring. This enables corporates to purchase due invoices from suppliers at a discount, providing a unique avenue for treasury management.
- Goldfinch’s decentralised credit protocol: Goldfinch introduces a decentralised credit protocol, enabling businesses to access crypto lending without the need for traditional crypto collateral. This approach, utilising RWAs as collateral, has garnered more than $100m in active loans across 28 countries in just over a year.
- RealT’s fractionalisation of real estate: RealT disrupts the real estate market by fractionalising US properties into RWAs. This provides corporates with the opportunity to invest in real estate in a more accessible manner, with digital tokens based on blockchain technologies.
- Ask the oracle: To ensure the seamless execution of tokenised asset terms, the reliance on ‘oracles’ has become increasingly critical. Oracles bridge the gap between on-chain and off-chain data, providing secure and trustworthy information to smart contracts. Chainlink’s Proof of Reserve is a prime example, commanding a significant market share and supporting numerous protocols. Corporate treasurers need to be vigilant about potential risks, understanding that oracles play a pivotal role in maintaining the integrity of the tokenisation process.
Buzz of expectation
Beyond the technical aspects, tokenisation is gaining momentum in the corporate world’s perception. The buzz on social media platforms, particularly X (formerly Twitter), reflects the growing interest and curiosity surrounding this transformative trend. Corporate treasurers can benefit from staying informed about the social discourse, understanding the broader industry sentiment, and adapting their strategies accordingly.
The impact of tokenisation on corporate treasurers is undeniable. It’s not just a technological advancement; it’s a strategic move that can redefine how corporates manage their assets and investments. The examples of Siemens, J.P. Morgan, and other pioneering corporates demonstrate the tangible benefits of integrating tokenisation into treasury management practices.
The growing ecosystem of tokenisation platforms, coupled with the increasing adoption by institutional players, presents a unique opportunity to unlock new revenue streams, enhance liquidity, and navigate the evolving landscape of finance with confidence.
As BlackRock’s CEO, Larry Fink, stated in July 2023: “We do believe that if we can create more tokenisation of assets and securities … it could revolutionise finance.” With that, I too believe that the future of treasury management is digital, and corporate treasurers who seize the opportunity presented by tokenisation will undoubtedly be at the forefront of this financial evolution.
