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Tokenized assets are tokens whose price is linked to securities, commodities, derivatives, real estate or art.
Sale of traditional and tokenized assets leads to a single result – the value of the tied asset grows, respectively, the value of tokenized twins grows by the same percentage.
How do exchanges issue tokenized assets?
There are 2 ways to release tokenized assets:
- by purchase — the owner of the token has the opportunity to exchange it for the underlying asset.
- without purchase – the owner of the token does not have the opportunity to exchange it for the underlying asset. In this case, the value of the asset is backed by digital currency or fiat money.
How similar are tokenized assets and non-fungible NFT tokens?
NFTs are non-fungible tokens that have one-of-a-kind identifiers, they are unique and this is their value. The value of the same NFTs may well be different, depending on the technical implementation. But tokenized assets are interchangeable and equivalent. Each unit is equal to another unit and has the same properties and rights.
However, it should be noted that some NFTs are considered tokenized assets, for example, those tokens that provide evidence of ownership of physical objects.
Regulation of tokenized assets
In fact, trading in tokenized assets does not differ in any way from trading in digital currencies, that is, cryptocurrency exchanges are licensed to trade them. However, since certain types of assets can be linked to securities, this raises the legal possibility of applying securities laws to its regulation. This question has already caused a backlash in the market, with Binance ditching the recently announced trade shares of Tesla, Coinbase, etc.
What are the advantages?
To trade on a regular exchange, you need an agreement with a broker and often in paper form. Quite often, intermediaries set a commission for asset trading, for example, 0.1-0.5% or more, but not less than $50. There are also hidden fees by the type of payment for account maintenance / storage of assets.
To trade tokenized assets, a trader only needs to register on a cryptocurrency exchange, as well as go through verification procedures and key. Crypto exchanges can be chosen according to your own requirements, because they have transparent commissions and there are no various hidden fees.
Who Should Try Trading Tokenized Assets?
First of all, this should be done by traders who are looking for new trading instruments. Digital currencies often follow the course of Bitcoin, but the value of these stocks, indices, commodities and many other assets rises and falls independently of each other.
Tokenized assets, among other things, help to diversify the crypto portfolio without registering on various platforms and concluding unnecessary contracts.