A security token represents ownership in an asset that has been created digitally to unlock the power of the block chain. They are subject to regulation and need strict compliance standards. So the real question is, why tokenize security? This all comes down to blockchain! Read on to learn about the typical tokenization process:
Well, there are traditionally laborious and manual processes involved in getting these securities to the automated market. It allows investors to increase efficiency and reduce room for errors. tokenization platform has the potential to transform the market by offering wider investments and facilitating the innovation of new product offerings to a global pool of investors. The process is profitable in many ways:
Increasing Liquidity-Precisely because of their digital nature, security tokens represent ownership of traditional assets like private placements, real estate, or fine art as well. It increases the liquidity of traditional non-fractionable assets and diversifies one’s portfolio with access to unavailable ones.
Maximizing Efficiency– Utilizing the tokenization platform and blockchain technology can remove the need for legacy mediators. This further results in reduced settlement time and cost savings as well.
Reduced Cost- Transparent record keeping leads to significant reductions in bond issuance costs by up to 90% and fundraising costs by 40%.
Improved Liquidity– Today, more than $4 trillion is locked in private equity and real estate. Tokenization reduces the risk and makes it easier to manage complex requirements by programming rules. In addition, it opens up many ways to trade previously illiquid or non-fractionable assets.
Transparency- The tokenization platform promises to provide one golden source to rely on. This helps keep the cap table updated and reduces disputes in record keeping.
The Bottom Line
RedMatter is such facilitates innovation by providing new ways for investors to invest in assets safely. This tokenization platform registers assets on smart contracts traded on centralized and decentralized exchanges. Browse the official website to learn more about it!
READ MORE : How Asset-Backed Securities Improves Cash Flow and Liquidity for Business
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