Tokenization of deposits: trends, challenges and potential

Tokenization signifies the conversion of real assets into a digital representation, made available in the form of a token - a trend revolutionizing the financial domain by boosting liquidity and accessibility. And amongst these advancements, tokenized deposits stand out as a significant innovation. These deposits are undergoing a metamorphosis, transitioning conventional banking assets into digital tokens with the aid of blockchain technology. Furthermore, unlike regular transactions, tokenized deposits rely on blockchain's decentralized ledger for security and transparency; this, itself, not only streamlines financial procedures but also encourages greater compatibility and efficiency within the digital marketplace. Head of Macro Policy Research at State Street Global Advisors, Elliot Hentoff, believes that: “The history of technological innovation in finance has been toward increased liquidity, fractionalisation of assets and expanding capital markets. In this regard, tokenisation i…