Tokenization of Real World Assets

Tokenization is the creation of Blockchain Tokens that represent real-world assets like aircraft, art, carbon credits, collectibles, currencies, debt instruments, intellectual property, real estate.

It’s 2030 and you are relaxing on your favorite beach.

You whip out your smartphone and within minutes you’ve...

...bought shares in an innovative startup halfway across the world

...traded a fraction of a Picasso painting for an amazing pair of collectible sneakers

...invested in the copyright license of your favorite movie

...liquidated your gold holding

...invested in fractional ownership of an office building in an upcoming high-rent location...

Welcome to the future of money - intrinsic, decentralized, and digital!

Tokenization = Real World Asset x Blockchain

Tokenization is the creation of Blockchain Tokens that represent real-world assets like art, collectibles, copyright licenses, debt, equities, precious metals, real estate, etc.

1. Key Benefits of Tokenizing Assets

1.1 Increased Liquidity

Tokenization enables fractional ownership, allowing investors to buy and sell smaller portions of assets. This democratizes investment opportunities and enhances market liquidity, making it easier for asset owners to find buyers and vice versa.

1.2 Lower Costs

Tokenizing assets can significantly reduce transaction costs, as it streamlines the process of asset transfer and eliminates intermediaries. This reduction in fees and administrative expenses makes investing in tokenized assets more cost-effective for both investors and asset owners.

1.3 Faster Transactions

Blockchain technology enables rapid settlement of transactions, speeding up the process of buying and selling assets. This efficiency reduces the time it takes for asset transfers to be completed, leading to increased market activity.

1.4 Enhanced Security

Blockchain's inherent features protect tokenized assets from fraud and cyberattacks. The transparent nature of blockchain also minimizes the risk of counterfeit assets entering the market.

1.5 Global Market Access

Tokenization opens up global investment opportunities by breaking down geographical barriers. Investors from around the world can access tokenized assets on blockchain platforms, fostering cross-border investment and diversification.

1.6 Improved Transparency

Tokenization brings transparency to asset ownership and transactions. As blockchain records are immutable and publicly accessible, investors can verify the history and authenticity of assets, reducing the risk of fraud.

2. What can be tokenized?

Some examples of real-world assets that can be tokenized include:

1. Aerospace Assets: Lunar Landers, Rockets, Rover Vehicles, Satellites, Space Probes, Space Stations

2. Art: Installations, Oil Paintings, Sculptures, Watercolors

3. Aviation Assets: Airports, Commercial & Cargo Planes, Drones, Engines, Flight Simulators, Helicopters, Private Jets, Seats, Loyalty Points

4. Carbon Credits

5. Collectibles: Antiques, Books, Cars, Coins, Furniture, Historical Artifacts, Jewelry, Notes, Sneakers, Stamps, Watches, Wine

6. Copyright Licenses: Books, Movies, Music, Software, TV Shows, Video Games

7. Fiat Currencies

8. Financial Investments: Alternative Investment Funds, Debt Securities, Distressed Financial Assets, Equity Investments, and Mutual Funds

9. Infrastructure: Airports, Bridges, Dams, Data Centers, Energy, Oil Rigs, Pipelines, Ports, Railways, Roads, Telecom Towers, Warehouses

10. Loyalty Points & Rewards: Hotel Points, Credit Card Points, Airline Miles, Retail Rewards

11. Maritime Assets: Cargo Containers, Cruise Ships, Fishing Vessels, Oil Tankers, Ports, Submarines, Yachts

12. Metals: Copper, Gold, Palladium, Platinum, Rare Earth Metals, Rhodium, Silver

13. Mining & Mineral Rights: Forestry, Oil & Gas, Timber, Quarry, Water

14. Real Estate: Agricultural Land, Hotels & Resorts, Industrial Warehouses, Office spaces, Residential Properties, Self-Storage Units, Shopping Malls

15. Sports Teams & Franchises: Player Contracts, Sponsorship Deals, Sporting Event Tickets, Ownership stakes in Sports Teams, Stadium Ownership Rights, Naming Rights, Concession Rights, Merchandising Rights

3. Ten-step process

3.1.Asset Selection

Choose the tangible or intangible asset that you want to tokenize. This could be art, collectibles, copyright licenses, debt, equities, precious metals, real estate, or any other asset that holds value.

3.2 Legal and Regulatory Compliance

Ensure that the tokenization process complies with relevant laws and regulations in the jurisdiction where the asset is located and where the tokens will be issued and traded. This may involve engaging legal counsel and obtaining necessary licenses and permissions.

3.3 Asset Valuation

Determine the value of the asset to be tokenized. This may involve hiring a professional appraiser or valuator to assess the asset's worth accurately.

3.4 Custodian Appointment

Appoint a custodian to hold and manage the physical asset or the underlying rights and documentation associated with the asset. The custodian is responsible for ensuring the safekeeping of the asset and providing verification of ownership.

3.5 Token Creation

Develop and deploy tokens on a suitable blockchain platform to create digital tokens that represent fractional ownership of the asset. The code defines the properties of the tokens, such as their divisibility, transferability, and any associated rights or restrictions.

3.6 Token Issuance

Issue the digital tokens to investors, either through a private placement or a public offering, depending on the regulatory framework and the nature of the asset being tokenized.

3.7 Trading and Exchange

List the tokens on a suitable exchange or trading platform that allows investors to buy, sell, or trade the tokens. This provides liquidity to the tokenized asset and enables price discovery.

3.8 Asset Management and Reporting

Monitor the performance of the tokenized asset and provide regular updates to the token holders. This may involve tracking the asset's value, managing income generated by the asset, and reporting on any changes or developments related to the asset.

3.9 Token Redemption and Asset Disposal

Establish a process for token holders to redeem their tokens for a share of the underlying asset or its equivalent value in fiat or digital currency. This may involve selling the asset and distributing the proceeds to token holders or enabling token holders to exchange their tokens for physical ownership of the asset.

3.10 Ongoing Custodian Role

The custodian continues to play a crucial role in maintaining the link between the digital tokens and the underlying asset. This includes verifying the ownership of the asset, ensuring its safekeeping, and providing any required documentation or attestations related to the asset's status and value.

4. The Tokenization Ecosystem

The tokenization ecosystem consists of various entities that contribute to the process of converting physical or intangible assets into digital tokens. These entities work together to ensure the smooth functioning of the tokenization process and provide the necessary infrastructure for creating, issuing, and managing digital tokens.

The key entities in the tokenization ecosystem include:

1. Asset Owners: The individuals or organizations that own the assets to be tokenized.

2. Custodians: Institutions responsible for the safekeeping and management of the physical assets or underlying rights and documentation associated with the tokenized assets.

3. Legal and Regulatory Advisors: Experts who provide guidance on the legal and regulatory requirements for tokenization, ensuring compliance with relevant laws and regulations.

4. Blockchain Developers: Professionals who create and deploy smart contracts on a blockchain platform to represent the tokenized assets and enable their transfer and management.

5. Token Issuers: Organizations that issue digital tokens, either through a private placement or a public offering.

6. Exchanges and Trading Platforms: Platforms that allow investors to buy, sell, or trade digital tokens, providing liquidity to the tokenized assets.

7. Broker-Dealers: Registered intermediaries that facilitate the buying, selling, and trading of digital tokens on behalf of investors.

8. Wallet Providers: Companies that offer digital wallets for securely storing, managing, and transferring digital tokens.

9. Asset Managers: Professionals or firms responsible for monitoring the performance of the tokenized assets, managing income generated by the assets, and providing regular updates to token holders.

10. Market Makers: Participants who help maintain liquidity in the tokenized asset market by buying and selling tokens, providing price discovery and stability.

11. Data Providers and Analytics Companies: Firms that collect, analyze, and provide data on the tokenized asset market, enabling investors to make informed decisions.

12. Regulators: Government agencies responsible for overseeing the tokenization process, ensuring compliance with relevant laws and regulations, and protecting investors' interests.

These entities work together to facilitate the tokenization process and create a robust ecosystem that supports the growth and adoption of tokenized assets.

5. Hybrid Finance Blockchain & Tokenization

Hybrid Finance (HYFI) Blockchain is the world’s first regulated blockchain. Its primary use case is the tokenization of real-world assets.

HYFI Blockchain is compliant with laws relating to KYC, AML, CFT, Freezing of assets, Consumer protection, Right-to-be-forgotten Regulations, and Data Privacy.

HYFI nodes can only be operated by regulated entities from FATF-compliant jurisdictions.

Regulators nodes are available for real-time monitoring of all activities on the HYFI network.

HYFI is a permissioned blockchain. Each address in the HYFI blockchain can have one or more of 8 permissions - Connect, Send, Receive, Issue, Create, Mine, Activate & Admin.

The benefits of a permissioned blockchain include Regulatory Compliance, Better Security, Improved Scalability, Enhanced Privacy, Faster Consensus, Efficient Resource Management & Customizable Rules.

HYFI supports millions of addresses, assets, streams, and unlimited transactions / stream items, and can handle unlimited nodes in the network.

With the capability to process more than 1000 transactions per second, HYFI can handle large volumes of transactions.

HYFI blockchain's block time is as low as 2 seconds, which helps to reduce latency & improve overall efficiency.

Hyfi has been granted the Limited Use Authorization as a “Fintech Entity (FE)” by the International Financial Services Centres Authority (IFSCA). Our authorization number is FE/LUA/025/665/2023-24.

International Financial Services Centres Authority (IFSCA) is a unified authority for the development and regulation of financial products, financial services, and financial institutions in the International Financial Services Centre in India. (https://ifsca.gov.in)