Digitization of assets generates numerous business opportunities and ensures significant operational gains, standardization, agility, and greater liquidity

"Our job is to create solutions that take the complexity out of blockchain technology and make the tokenization process easier, accelerating the adoption of the Digital Asset universe by our customers."
Marcos Viriato
Parfin CEO

The evolution of web3, which is no longer just an innovative concept to become a reality, generates countless business opportunities for those interested in the operation of digital assets. The third generation of the internet walks alongside decentralization and has helped to popularize blockchain technology, the use of cryptocurrencies, artificial intelligence, and machine learning.

In this scenario, a process that is gaining more and more space is asset tokenization - financial and non-financial, which is nothing more than the generation of representation of these assets in a fully digital format through blockchain, where records and transfers are immutable and confirmed in a decentralized way. Today, large companies are already seeing this trend.

The movement is set to grow even more powerful with the development and operation of digital currencies in central banks around the world. Here in Brazil, the president of Bacen, Roberto Campos Neto, has already stated that we are migrating to a tokenized financial system and that Brazil is well advanced in this direction – the launch of the Digital Real is scheduled for 2023, in the wake of several successful solutions such as Open Finance and PIX.

For those who want to bet on this trend, the gains promise to be very expressive: for companies, there are cheaper ways to raise funds and also opportunities to sell assets that would not have been possible before without digital representation through tokenization, while for investors, in particular, institutional ones, new investment opportunities will arise with opportunities to acquire an entire asset or even a fraction of it – in token format.

Today, 9 Digital Real use cases are being tested in the LIFT Challenge, a collaborative laboratory created by Bacen. Parfin, leader in web3 infrastructure in Latin America, is Santander's partner in one of the projects (DvP in blockchain + tokenization of property rights), as highlighted by the newspaper Valor Econômico in this news . The solution developed jointly between Santader and Parfin, used Parchain, a permissioned blockchain that allows total control of the participants and one of the most advanced solutions for custody of digital assets through MPC technology. Besides the tokenized Real, the solution has made it possible to tokenize automobiles and real estate.

“This movement is going to be huge. I strongly believe in accelerating the tokenization of financial, non-financial, and physical assets to generate more injection and financing possibilities for the economy, greater liquidity, and capital flow for investments”, says Parfin’s CEO, Marcos Viriato, noting that the novelty has the potential to reach all economic segments.

What are the advantages of tokenizing assets?

For Viriato, the benefits of tokenization still generate many doubts in the market. "It is common to hear `why are you tokenizing? Is its cost gain, is its fractionation, is its easiness to raise funds, is its gain in efficiency?'”. For him, all these answers make sense, but the great advantages are in the possibility of enabling new – and cheaper – forms of investment, and the emerging of new assets for the final investor, whether financial or non-financial, which in some cases allows investors to acquire the whole or a fraction of it.

“Think of a fundraising operation by a small company through equity sale. Even if the company wants to, it would be difficult to go to the bank and ask for help with R$2 million in funding', because the amount would not compensate the issuing costs. Tokenization can make these operations viable for SMEs”, says the executive, indicating the changes that need to be made so that there is a drop in operating costs. “You lower the cost as long as there is a change in legislation, which has a simpler offer registration, which does not need intermediaries such as a trustee, for example”.

“It is a bit of what the CVM (Securities and Exchange Commission) is trying to do through the regulatory sandbox, because there is no point in tokenizing a security, for example, and having to register it in the traditional way, with all the entities involved, such as bookkeeper, trustee, and so on. By tokenizing just to have a mirror of what is in the traditional world and there is not much advantage, you only create a digital representation”, adds Viriato.

With the expansion of this market, individual investors will have a much wider range of options – safe, transparent, and traceable – to diversify their investments. With tokenization and the possibility of fractionation, anyone can have access to digital assets that were previously only available to large investors or financial institutions.

Despite the largely positive and favorable scenario for digitalization, the executive reinforces that some points still deserve attention. "Not every tokenization will achieve everything. Perhaps there is no market (to consume an asset), and perhaps the need to live with old structures (registries and bureaucracy in general) does not allow you to have an effective cost reduction”, he says.

"We could tokenize even commodities - soybeans, corn, cattle, energy. If someone validates that the production is stored in a warehouse, I can anticipate the sale of the digital representation of it.”
Marcos Viriato
Parfin's CEO

Blockchain and the tokenization of financial assets

Asset tokenization has recently arrived in the Brazilian financial market. In early June of this year, Vórtx QR Tokenizadora launched the country's first tokenized securities using Parfin's MPC custody solution. Check out the case here.

Therefore, large Brazilian companies wanted to explore the technology; anticipating the trends, Parfin will soon launch its own permissioned blockchain network, a secure ecosystem – and compatible with Ethereum technology – created to serve the institutional market and which aims to explore new use cases, such as tokenization of financial and non-financial assets. Soon, something new is coming!

Is your company ready for a tokenized world?

The future has already arrived: in an increasingly competitive scenario, those who stand out are those who are one step ahead. Do you want to position yourself and simplify the world of digital assets?