KEY POINTS
- The sentiment toward tokenization was generally optimistic among Consensus 2024 participants: ALTA CVO Yaroslav Ivanov
- ARK Invest remains cautious but demonstrated commitment to blockchain tech exploration: Ivanov
- Addressing challenges effectively can help tokenized funds transition smoothly into the financial system, he said
- Ivanov said crypto regulation was a central theme among prominent participants, including Ripple's CEO
CoinDesk's Consensus 2024 event in Austin, TX, brought together the most prominent figures and key players in the cryptocurrency industry today, and among the key topics discussed among attendees was tokenization and Bitcoin.
Yaroslav Ivanov, the Chief Visionary Officer at blockchain laboratory ALTA, shared with International Business Times the discussions he had with investment management firm ARK Invest CEO Cathie Wood and cross-border payment and crypto custody solutions giant Ripple CEO Brad Garlinghouse.
Tokenization, the process through which something of value is converted into a digital token that can be applied on the blockchain, gained paramount attention during the event, Ivanov revealed.
"Based on my attendance at Consensus 2024, the general sentiment among key players regarding the crypto market, specifically on tokenization, is notably optimistic and forward-looking," he said. He added that tokenization's "current phase" stands out since it is focused on foundational infrastructure and also reflects the maturity of decentralized finance (DeFi) in contrast to traditional finance.
He further revealed that there is an apparent rise in "institutional involvement" in tokenization. "Discussions highlighted growing interests among institutional investors in integrating tokenized assets into their investment strategies."
Ivanov observed that ARK Invest's approach to tokenization was more "cautious" than BlackRock, the world's largest asset manager. ARK Invest is focused on investor safety and reputational risk management, "particularly in anticipation of regulatory changes influenced by upcoming U.S. elections."
On the other hand, the company, is actively exploring blockchain technologies, which, according to Ivanov, "reflects their commitment to harnessing blockchain technology for future growth and innovation." The exploration includes ARK's collaboration with 21Shares for the launch of the ARKB spot Bitcoin exchange-traded fund (ETF).
When asked what challenges he thinks the tokenized funds subsector will face in terms of broader adoption, Ivanov sees early adopters initially struggling with regulatory compliance, cybersecurity threats, and educational barriers. He acknowledged that the sector is vulnerable to issues that could affect investor confidence. On the other hand, he said effectively addressing challenges associated with tokenization is crucial to ensure that tokenized assets and funds can smoothly enter the financial ecosystem.
While there were talks about the challenges faced by tokenization, Ivanov said "optimism about the future of tokenization prevailed" among the attendees. "The consensus was that continued collaboration among industry stakeholders, regulators, and technology providers can address current obstacles and unlock new growth opportunities for the tokenized asset space."
Ivanov believes tokenized funds and assets have the potential of becoming a "core" subsector in the digital assets sector. He said Tether's initiatives on public tokenization indicates there is a broader trend of injecting blockchain solutions into various sectors. The said trend not only holds promise for a transformation in asset management and trading practices, but also lays the groundwork for a "more inclusive and transparent financial ecosystem" that is propelled by blockchain technology.
Regulatory clarity also became a central theme at the event, he said. "Participants stressed the importance of clear and coherent regulations to stimulate innovation while safeguarding investor interests. Such clarity is seen as pivotal for broadening the adoption and mainstream acceptance of tokenized assets," he revealed.
The call for regulatory clarity has been a movement in the wider digital assets industry in recent years. Among the leaders in the cause are crypto exchange giant Coinbase, which has been pressuring the U.S. Securities and Exchange Commission (SEC) to implement new rulemaking dedicated to the fast-growing sector.
Ivanov spoke with Garlinghouse regarding regulation. "Being part of the vanguard is always difficult, as evidenced by Ripple's experience, having been the first to defend its position amidst numerous attacks from uncertain regulators," he pointed out.
The two crypto leaders concluded that unity under the Crypto Super PAC (political action committee) Fairshake initiative is necessary. Interestingly, Coinbase has also urged support for the said cause, saying the wider crypto industry can obtain regulatory clarity by voting for pro-crypto candidates who can raise the flag for digital assets policies.
