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  • Revolution: The entire traditional financial market will be tokenized

Revolution: The entire traditional financial market will be tokenized

In a 5.0 society, few transactions are not yet digital. Today, work, leisure, consumption, communication relations go through electronic systems. In the financial world it is no different. In this sense, we can foresee not only the advance of the cachless economy, but a trend that is here to stay: tokenization.

The model came to eliminate the need for intermediaries and offer investors more accessibility to all types of investments. And in a segment hungry for security and speed, tokenization meets a growing demand. No doubt, the solution is joining other great innovations of the 21st century, such as internet banking, cryptocurrencies stablecoins and other technologies that have completely transformed the way people deal with money.

With instant electronic payment methods and pocket banks running on cell phones, the financial industry is already in a new era of digital transformation. In this scenario, tokenization, allied with the Central Bank‘s agenda, should leverage not only innovation, but also open the market to new players that didn’t participate in the game before, further intensifying competition and, consequently, the cost-benefit of the offers to customers.

Even though the number of unbanked people in Brazil is high – 34 million people still don’t have access to banks, which is equivalent to 10% of Brazilians – the digitalization of the financial universe is in full swing. Zoop’s trend report pointed out that the Pix model is here to stay and is already used by more than 117.7 million Brazilians today. Digital wallets follow the same line of growth, with 89% of people adhering. The survey also found that proximity payments saw a growth of over 384%, comparing 2020 and 2021. This resulted in R$ 198.9 billion in transactions in this modality alone.

The financial market is extremely regulated, especially when it comes to the security of money. However, there are laws and regulations that need to evolve to keep up with changes in technology and old concepts that are changing and no longer fit in today’s society. Today, tokens have no regulation of their own, so the laws that protect both the asset owner and the investor are those that govern the tokenized asset itself, such as CVM regulation in the case of securities.

This is yet another scenario in which we can observe the pioneering nature of tokenization, as it goes beyond transforming the ways of doing business in the financial market to revolutionize the legislation that governs it.

In addition, tokenization allows the investment, settlement, and timing processes to get an upgrade. After all, in the traditional market, there are several limiting factors, such as settlement that is not instantaneous, a physical location that does not operate 24 hours a day and seven days a week, and other obstacles that crypto technology solves. In fact, in the next few years, the traditional financial market will be entirely tokenized.

Source: Fintechs Brazil

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