Tokenization may be the crypto equivalent of the ETF, with adoption rising faster than past crypto-native breakthroughs. On The Block, Ondo Finance Head of Product Portfolios John Hoffman shared his view that today`s doubt and hesitancy resemble exactly the situation faced by early ETFs, with an exciting technology being just right to change market structures and facilitate international sales.
Why does Tokenization reflect Early ETFs?
John Hoffman, the Head of Product Portfolios at Ondo Finance, drew a parallel between timelines leading to a billion-dollar asset size: stablecoins, three years; Tokenized Treasuries, eighteen months;Tokenized Stocks, six months; and Ondo Stocks, eight months.
This remarkable time difference means finding a suitable combination of product and market while resembling how ETFs transformed into the backbone of the market. This transformation needed clear regulations, intermediary support, and clear examples for portfolio construction, and finally broad investor adoption.
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Accelerated changes in Financial Instruments
Investors and large organizations benefit from faster growth as it allows them better use of world-wide systems where they can trade with, set the collateral or settle in stablecoins. Exchanges, custodians, and developers but, see it as an opportunity to combine their current infrastructure with tokenized equities and Treasuries.
Source: Ondo Finance
The situation is connected with the wider expansion of tangible assets in the real-world asset category, which can be seen on platforms like DefiLlama and RWA.xyz, where Ethereum, Stellar, and Polygon are trying to capture new issuers and regulate securities rails.
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Regulatory Clarity Drives Growth
Hoffman highlighted the gradual development of regulatory setups for tokenized assets in the United States, which should be a perfect complement to DLT securities regimes already in place in the EU and UK and may stimulate additional production.
Other potential drivers are broker-dealer licenses, the possibility of liquidity of secondary market assets, the standardization of cross-chains, and reserve validation.
Source: Ondo Finance
A successful tokenization process might enable extending the ETF model, giving rise to “programmable” 24/7 markets going beyond the dollar and still maintaining the regulations, compatibility and high degree of liquidity for market participants.
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