It is obvious to many that one of the most practical features of blockchain is the tokenization of assets and the intrinsic reduction in cost to manage these assets. Digital securities are the future. We just aren’t quite there yet.
One firm is reportedly putting a number to paper to declare a cost comparison to the old-school analog methodology for securities and what will soon be the norm. According to an X distributed by RWA.xyz, a tokenized asset tracking platform, Franklin Templeton says the legacy cost of clearing 50,000 transactions is around ~$50,000. If you put blockchain into the equation, that number drops to about a buck fifty-two ($1.52) or an improvement of around 30,000X. That is significant. Especially when you consider the gazillion of securities traded daily.
The revelation is said to have arrived during the RWA Summit (RWA = real-world assets), shared by Franklin Templeton’s Head of Digital Assets, Roger Bayston.
So why isn’t everybody already doing this? Isn’t this a “no-brainer?”
Well, yeah, but then factor in the reality that the financial services world is populated by executives who earn a lot of money, and an efficiency improvement of this magnitude could displace many. Why should all of these MDs and EVPs change and adapt? What innovation?
Of course, the other side of the equation is the fact that the top securities regulator in the US, the Securities and Exchange Commission, has completely missed the boat in transforming the securities sector by ignoring the need to pursue new rules that support digital securities. The Commission has focused a lot of time on punishing those pesky crypto startups while pursuing ESG initiatives that harm public markets. Tokenization doesn’t even appear to be on the SEC radar.
Hopefully, the next SEC Commissioner, whoever wins the Presidential election, will see the light and do something remarkable by being less political and more innovative when it comes to markets and regulation.
According to Franklin Templeton, clearing tokenized assets is over 30,000x cheaper.
Yes, you read that right.
On stage at the RWA Summit, Head of Digital Assets Roger Bayston compared the total cost of clearing 50,000 transactions:
Legacy system: ~$50,000
Blockchain: $1.52— RWA.xyz (@RWA_xyz) October 24, 2024
