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Cointree’s Shane Stevenson believes every financial asset will be tokenised
In the weird and wonderful world of cryptocurrency, almost every day a new buzz-word is added to our vocabulary to reflect the fast changing scene. For example, NFT, or non-fungible token, was made the Word of the Year by Collins Dictionary in 2021.
For those that don’t know, NFTs are certificates that prove you own a digital item. They give you ownership to the original version of a video, tweet or meme. In this article, the word of the day is tokenisation.
To explain this new word, you first need to “tokenise” an item, which means you’ve turned it into a completely different object. But the new object, while it looks different, represents the original item. In other words, tokenisation is the process of turning a meaningful piece of data, such as an account number, into a random string of characters called a “token,” that has no meaningful value if breached.
Inside Investor sat down with Shane Stevenson, CEO of Australian crypto trading platform Cointree, to take us through the concept. Stevenson says tokenisation” provides Cointree members with the opportunity to invest in the underlying technology of an exciting new financial ecosystem.”
But how exactly? Can physical real estate be tokenised?
“Absolutely,” Stevenson says. “Physical real estate has already been tokenised in Thailand. The Securities Exchange and Commission of Thailand provided a licence to Fraction, a token offering service based on the Ethereum blockchain. As real estate is a physical asset, it’s essential that the ownership rights granted by the token are upheld by the local government. That’s why regulations around cryptocurrency and tokenisation are so important. Luckily, regulators in Australia are looking to help grow the crypto industry.”
Stevenson explains that a token provides the owner property rights over a digital or real-world asset. “For example, tokenised stocks provide the owner with all future dividend payments, while tokenised real estate can provide cash flow from rent. Furthermore, owners can then use these tokens as collateral to obtain loans or sell them on a marketplace. At a high level, tokenisation increases the liquidity and grows the available capital of the entire financial system.”
To what other assets could tokenisation apply? Is it possible, for example, to tokenise a vintage car?
“Firstly, tokenisation makes fractionalised ownership of real-world property possible,” says Stevenson. “That means every Australian could invest as little as $20 in previously illiquid and expensive assets like premium luxury real estate, fine art, and yes, vintage cars.
“Secondly, tokenisation also makes it easy for Australians to use their own real-world assets as collateral in order to obtain loans. With a more competitive market for these loans, Australians will be able to obtain much more favourable interest rates,” he says.
Tokenisation could even, potentially, give Australians a measure of control over their favourite sports team, Stevenson says. “For example, one day, token-holders of an AFL team could vote on which players to select in the draft, how to invest membership fees, and even distribute club profits. This is already happening with soccer teams in Europe, although the control token-holders are given remains quite limited for now,” says Stevenson.
When asked how tokenisation can benefit Cointree members, Stevenson says members benefits right now and in the future. “At the moment, Cointree members have the opportunity to invest in underlying blockchains that tokenisation platforms are being built on, such as Ethereum. In the future, tokenisation will give Cointree members more control over their assets and the opportunity to invest in assets that were previously too expensive,” says Stevenson.
In future, Stevenson believes every financial asset will be tokenised. “Instead of the control of important financial assets being trusted to a single centralised institution, these assets will be tokenised secured by multiple parties on a decentralised blockchain,” he says.
