A Better, Simpler Financial Ecosystem through Smart Tokens

Written by Dr Ian Hunt

The focus of digital asset developments in finance has swung onto the tokenisation of ‘real assets’.  This means creating tokens for familiar investable assets, such as equities, bonds, loans etc., as well as alternatives like real estate, art and commodities. It is important to see that tokenising a real asset does not create a digital asset: it just gives us a digital way of representing ownership of a conventional asset. Buildings, commodities and works of art are obviously physical, and it is natural to see them as coherent and singular assets.  However, we also think of, and represent financial assets as coherent, singular things that we own, in the same way we own a car or a piece of cutlery.  We buy the asset and put it in our portfolio, kept safe in our custodian’s vault, like we put the cutlery in a drawer in our dining room.

Issuing or owning a financial asset brings with it responsibilities for processes within the operating model of the asset class. The issuer of a bond, an…