Market analyses show that tokenization is one of the most important trends of 2023. Billions of dollars of assets will be tokenized in the next 10 years. The tokenization of assets will change the investment landscape and revolutionize the way traditional assets are bought, sold and managed. The benefits are so compelling that no one can escape this trend in the long term. But how can tokenization platforms be found?
In a newly emerging market, this is not at all easy, as the market is confusing and still lacks transparency. On the one hand, there are a large number of new players and, on the other, established players such as large financial institutions are starting to position themselves with offers. Everyone is trying to get a slice of the huge pie, and this is happening via tokenization platforms. Through these platforms, assets are digitized and issued as tokens. Tokenization platforms enable the conversion of traditionally managed assets into new digitized assets. They are at the heart of digital transformation in the asset sector.
Differentiation of the asset tokenization platforms
The providers of tokenization services offer different variants. The variants differ considerably in terms of content and the supplementary services offered.
On the one hand, there are the “pure” software manufacturers who offer their customers software for asset tokenization in order to operate such a platform. In this case, software is provided and delivered to the customer. The use of the software and all necessary processes relating to tokenization are implemented and taken over by the customer. This variant can be interesting for large financial service providers, for example, who want to offer their own tokenization services to their customers, but want to guarantee this within the framework of their own existing processes, infrastructure and system. Strictly speaking, this would not actually be an asset tokenization platform, but rather asset tokenization software.
The opposite pole is represented by “Tokenization as a Service” providers, who take over the entire tokenization process for their customers, from start to finish. Tokenization is carried out entirely on the provider’s systems. The customer purchases a full service that ultimately delivers tokenized assets with all the necessary regulatory framework conditions.
There are a large number of variants and gradations between these two poles. Here is an example of what these gradations can look like:
The decisive factor for the customer in the selection decision is which steps of the tokenization process he wants to take over himself and which steps should be ensured by partners. An asset tokenization platform must then be selected accordingly.
Function and features of asset tokenization platforms
In terms of content, tokenization platforms have various product features. Here is an example:
Asset Tokenization platforms such as Token Tool by Bitbond offer a variety of services such as the creation, management and distribution of tokens. Other features include launching token sales, tracking crypto portfolios and gas prices. Token Tool offers support for four EVM-compatible chains, including Ethereum, Polygon, Avalanche and Binance Smart Chain.
Ultimately, tokenization platforms must include all functions and features to map the tokenization process. Essentially, the process can be divided into the following steps:
Asset tokenization platforms are software solutions to perform the conversion of physical and digital assets into digital tokens on the blockchain. These platforms offer a wide range of functions, including asset tokenization, management and trading of tokenized assets.
Here is an overview of how platforms for tokenizing assets work:
Selection of assets
The providers of the asset tokenization platform work with asset owners to identify suitable assets for tokenization, such as real estate, art or private equity. The platform ensures that the selected assets comply with the regulations and the specific criteria for tokenization.
Due diligence and valuation
The asset tokenization platform conducts thorough due diligence on the selected assets and assesses their legal status, ownership and potential risks. The platform also assesses the value of the asset to determine the appropriate number of tokens to issue.
Token creation
Using a software solution based on blockchain technology, the asset tokenization platform creates digital tokens that represent a fractional ownership of the selected assets. These tokens are uniquely identifiable and can be traded and managed via the blockchain.
Compliance with legal regulations
The asset tokenization platform ensures that the tokenization process complies with prescribed regulations, such as Know Your Customer (KYC), Anti-Money Laundering (AML) and securities laws.
Token issue
The asset tokenization platform issues the newly created tokens to investors who wish to acquire partial ownership of the assets. This can be done via an initial offering or a listing on a secondary market, e.g. a crypto exchange.
Asset management
The asset tokenization platform provides investors with features and services for managing their tokenized assets. This includes tracking the performance of the assets, facilitating transactions and ensuring the correct distribution of income or dividends generated by the assets.
Trading on the secondary market
Asset tokenization platforms can partner with crypto exchanges or create their own secondary markets to enable the trading of tokenized assets. This allows investors to buy and sell their tokens, increasing liquidity and offering profit opportunities.
Overview of tokenization platforms
It is currently relatively difficult to get an overview of available asset tokenization platforms. Due to the new market, the topic is still in its infancy and there are not yet any established players.
Through research it is possible to locate some providers, but it is then necessary to deal with the tokenization services offered in detail.
The Digital Asset Compass offers great assistance. This site lists a large number of providers. The providers listed there can be filtered according to various criteria, making it possible, for example, to find tokenization platforms that specialize in real estate tokenization in America.
The following list is an excerpt from the tokenization services that are recorded on the Digital Asset Compass
Archax
Archax is the first digital securities exchange to be regulated by the FCA in London. Archax is aimed at institutions and also has its FCA brokerage, custody and cryptoasset authorization.Bitbond
Bitbond
Bitbond is a leading technology provider of bankable tokenization and digital assets technology. Following the implementation of Europe’s first security token offering, which was approved by the German financial regulator BaFin in 2019, Bitbond has started to provide our tokenization technology and expertise to banks and token creators.
Black Manta Capital
Black Manta Capital Partners (“BMCP”) is a one-stop agency for all technical, financial, and legal aspects of asset and security tokenization. Therefore, BMCP operates a multi-STO platform for issuances in the European capital market.
BlockInvest
BlockInvest is an Italian start-up that uses blockchain technology to tokenize financial assets and improve the efficiency and transparency of financial markets. The platform offers comprehensive solutions for banks and financial institutions, enabling them to create, issue and manage security tokens completely autonomously and in compliance with all regulations, thus shaping the future of the financial industry.
BlockSquare
Blocksquare is a technology company that builds the infrastructure needed to transfer real estate assets online. Companies of all sizes — from new startups to publicly traded companies — use our blockchain infrastructure to offer and manage their real estate investments online.
Brikken
Brikken enables tokenization by providing an all-in-one platform with user-friendly tools and features that make it easy for companies to tokenize and self-manage their digital assets.
Cashlink
The financial technology company Cashlink offers a leading European infrastructure for the tokenization of assets. In November 2021, the company received preliminary approval from BaFin to operate a crypto securities registry that covers the entire value chain for the tokenization of securities.
DigiShares
DigiShares provides white-label solutions for the issuance, corporate management and trading of digital assets. DigiShares typically works with asset managers, investment fund managers, real estate developers, renewable energy project developers, etc. who are interested in more efficient ways to raise capital and manage a large group of investors in their funds.
Finexity
FINEXITY AG is one of the first companies in the world to offer tokenized assets as an investment opportunity. FINEXITY reduces the investment hurdle for interested investors to a minimum and offers maximum flexibility and liquidity
Polymath
Polymath Network (Polymath) is a decentralized protocol that facilitates the raising of capital and the creation of security tokens. The security token standard, ERC-1400, embeds regulatory requirements into the tokens themselves and restricts trading to verified participants only. The protocol simplifies the complex technical challenges of creating a security token and aims to bring the multi-trillion dollar financial market for securities to the blockchain.
Realiz
Realiz.io, a leading French company, has developed a smart way to invest globally.
RealT
RealT is the innovative new platform designed to simplify global access to U.S. real estate investments. The platform, based on the Ethereum blockchain, allows investors around the world to buy into ownership of US real estate and earn passive rental income through a compliant, smart and user-friendly platform. Ownership of each property is securitized in unique ERC20 tokens on Ethereum.
STOKR
STOKR is a virtual asset manager registered with the Luxembourg supervisory authority CSSF. The company offers investment opportunities and tokenization services.
Tangany
Tangany is a German provider for the custody of digital assets and cryptocurrencies. In addition to custody services, Tangany offers various tokenization services.
Taurus
Taurus Group SA is a digital asset platform for issuing and managing cryptocurrencies, tokenized assets and digital currencies. Taurus is building the next generation platform for buying and selling digital assets.
Tokenforge
Tokenforge is a Berlin-based technology provider that offers its customers a software toolkit for asset tokenization that provides the ability to tokenize assets in a legally compliant, fully digital and code-free manner.
Tokeny
Tokeny provides an enterprise-grade infrastructure that enables companies and financial players to issue, transfer and manage assets in the form of tokens on the blockchain, improving asset liquidity.
tZERO
tZERO, a global leader in blockchain technology for capital markets, aims to enable the market to securely tokenize and trade digital securities.
Summary
The aim of this article was to provide an introduction to the topic of asset tokenization platforms. In its core function, such a platform is a software solution that enables the issuance of digital tokens on the asset.
But the mere creation of the token is part of an extensive process that is necessary to tokenize assets. Compliance with legal requirements and the content of the tokens must be carefully planned and implemented from start to finish and are an essential part of the asset tokenization process.
It is therefore advisable to assess your own expertise in relation to the topic of tokenization and then look for the right tokenization platform with the appropriate services. The support of a consulting partner is highly recommended, especially at the beginning, as numerous aspects need to be considered during implementation.
The market of offers and providers will continue to grow, similar to the market for new software solutions and the associated consulting services. The overview of asset tokenization platforms presented in this article is an aid to finding offers and solutions from providers and to making an initial classification and comparison. The in-depth selection process should then be carried out in consultation with several selected platform providers.
