The Tokenization Process Becoming Even More Obvious
What once took a great deal of foresight to see is now rather obvious. The progress made over the last couple years along with greater adoption is paving the way for an entirely new system.
Some call it Web 3.0, others the tokenization of everything. Whatever term is used, it all means the same thing. Blockchain technology is going to be the foundation of much of our data. At the same time, due to increased benefits, assets will be tokenized in ways we have not year imagined.
Thus far, it is relegated to those who are cybernerds and outcasts. The crypto community is not yet mainstream but that is going to change.
In fact, there is a lot of attention being garnered from very mainstream people. When we look at the world of finance, nothing fits that description better than the Securities and Exchange Commission (SEC). Therefore, the remarks by Chairman Jay Clayton carry significant weight.
Holding a webinar, the lead regulator stated how the "door is wide open" for entities to tokenize an ETF. Going one step further, he mentioned that he envisions a time when stocks will also be tokenized.
Joining Clayton on the webinar is comptroller of the OCC, Brian Brooks. He is a strong crypto advocate, working with Coinbase before joining the banking regulator. He, too, sees a future where blockcian and cryptocurrency are the norm.
According to Brooks, who was a former Chief Legal Officer of Coinbase, “most” cryptocurrency projects would fail if they are not “relevant to a particular need.” He added that banking regulators should “drive the framework” in the use case of stablecoins to enhance efficiencies in the payment system and that in the case of tokenization of ETFs, the SEC was “willing to drive” that.
Here we have a logical viewpoint, one that many fail to realize within the crypto realm. Blockchains and cryptocurrencies that have little purpose will probably simply drift away. Anyone who spent time in the crypto world knows how projects, including entire blockchains, can stall due to lack of development.
Having two of the United States top regulators talking about cryptocurrency is enormous. They both see that tokenization is going to be the norm. Naturally, they feel that regulation has to be written to embrace the newer developments, something most in crypto can do without. There is a showdown between the "Wild West" environment and the regulated, centrally monitored one governments prefer.
Clayton did provide some clarity about what makes a cryptocurrency a security versus one that did not.
If you’re not trying to finance your network, you’re not trying to give people a return on your network, it’s probably not a security.
But if what you’re trying to do is finance your network with your token or provide people with a return for using the network with your token, you look at the traditional tested security, it’s pretty clear it’s a security.
https://eng.ambcrypto.com/all-stocks-may-one-day-be-tokenized-sec-chairman/
This is pretty easy to agree with. However, where the disagreement comes in is with the idea of who should distribute and sell securities. The SEC believes only authorized entities should do it. The crypto world, for the most part, thinks anyone should be able to do it. With the expansion of the world of DEX, this is going to be an interesting fight in the future.
Nevertheless, this is a big step forward. No longer can anyone ignore this industry nor laugh at it as something that is going away. Only the most ignorant of technological minds, such as a Warren Buffett, believes this is not going to keep growing. Outside of that, the tokenization process is becoming clearer by the day.
All this is taking place a couple days after Atari, one of the leading gaming companies, announced the agreement to launch their token on Bitcoin.com in November. The pre-sale will take place in November.
A couple of years ago I wrote how there will come a time, in the not too distant future, where people will be earning 25-50 different tokens on a monthly basis. This will eventually grow into the hundreds as projects are developed that encompass our entire lives. If we follow the path of Web 3.0 out far enough, and understand how our biological and physical lives will be included, we see that tokens will be coming from everywhere. You will know the day arrived when your coffee maker is earning a few tokens each week.
The denying of the process is becoming impossible. Between gaming, social media, attention, sports, memorabilia, art, and securities, we are going to see hundreds of trillions of dollars tokenized over the next decade. This does not include the digital assets that are not even created yet which could possibly double the total.
As we move from a digital world to one that is virtual, other options are going to open up. Think of the film "Ready Player One' and then tokenize most everything you see in there. That is where we will be, likely by the end of this decade.
Just like most think it pretty nutty to sit down and write a letter before posting it through the mail system, we will look back upon our archaic methods today and realize how inefficient and foolish it was. The world of digitization means tokenization cannot help but to follow. There is no way for people to keep operating using the same means as the world undergoes so many changes.
This is garnering the attention of some pretty powerful people in government. It is becoming so obvious they cannot ignore it anymore. Of course, they will still try to hold onto the old system in hopes of remaining relevant. This happened a number of times over the last 30 years, all with the same outcome. Those that did not adapt ended up eliminated.
With an estimated 100 million people involved in cryptocurrency, globally, we have enough of a foundation to set off massive growth. We could see a tripling or quadrupling of that over the next couple years. As we close in on half a billion people, the innovation will be accelerated to keep pace.
It is at that time that things can get very interesting.
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