The illiquidity of an asset refers to its inability to be easily traded in a market. Conversely, a market is liquid when these assets are traded frequently and simply.

In the real estate market, the illiquidity is explained by the fact that investment mobilizes in large part both of time and capital. This creates an obstacle to purchase.

This same lack of liquidity is evident in the art, automotive and unlisted corporate securities markets.

Tokenization can provide a solution to this problem.

Tokenisation: the new way to make your assets more liquid with blockchain

The era of tokenization

Monegasque law No. 1.482 of 17 December 2019 for a Digital Principality, introduced the concept of tokenand recognises its legal existence:

Article 2 : The Token is “The token is “an intangible property representing in a digital format, one or more rights, goods or services, which can be issued, registered, stored or transferred through a digital registration device on a shared register and which, its issuance or subscription, has the legal nature of the right, good or service.”.

Tokenization is the creation of the digital representation of an asset in the form of a token on a blockchain. This process registers an asset and the rights attached to it on a digital token. This is in order to manage it and exchange it on a blockchain, in an instant and secure way.

Tokenization has no limits. All kinds of financial assets can be tokenized: commodities, real estate or financial instruments.

Tokenization and the use of a blockchain offer several advantages. Transparency and traceability of trade are promoted. Each transaction is recorded on the distributed register, immutably.

Much of the materialization of the paper transaction disappears. This makes the exchange process faster and more efficient. Also, humans are less present, therefore the risk of human error is reduced. So are the intermediaries’ fees.

To complete, discover: Tokenization, real estate investment within the reach of all stock exchanges.

Tokenisation: the new way to make your assets more liquid with blockchain

Tokenization solutions for illiquid assets

The use of tokenization of illiquid assets helps to erase borders. Anyone with Internet access can exchange tokens. The amount of investors can then grow remarkably.
For example, a tokenized painting seller may be in France, and its buyers in Peru, Japan or Australia.

The use of tokenization of illiquid assets removes the pecuniary barrier at the entrance. Tokenizing an asset means making it accessible to a greater number of investors. The fragmentation of the asset into a multitude of tokens allows a small fund holder to purchase one or more units of tokens corresponding to a part of it.

For example, a property can be split into 100,000 tokens, worth 1 euro. An investor may decide to invest only 5 euros on this real estate asset.

On the art market, the Monart project is a concrete case. The starting point of the initiators of the project was that 0.01% of the world’s population has access to this market.
Their tokens, known as MART, allow you to acquire and invest in plots of paintings, sculptures or other objects of art.

Solutions are also emerging in the real estate market. In this area Equisafe is a reference in France.

The tokenization of illiquid assets then opens the door to new investors who were previously private.

Tokenisation: the new way to make your assets more liquid with blockchain

Lory Feuvrier – Consultant Juridique Blockchain

Tokenisation: the new way to make your assets more liquid with blockchain