Liquidity and Regulatory Issues Are Obstacles to Tokenization of Real World Assets, Says Van Eck CEO

2024-01-30 19:33:10

In a January 28 interview with Real Vision co-founder Raoul Pal, Van Eck CEO Jan van Eck noted that a couple of major challenges are hindering the tokenization of real-world assets.

According to van Eck liquidity and regulatory issues are still blocking the progress of asset tokenization.

“Who provides the liquidity?” van Eck said. “Anyone can theoretically tokenize anything. But if there’s a buyer and a seller of an asset, someone’s got to make that market.”

Challenges in Asset Tokenization

For van Eck, the market structure around liquidity is the core issue.

“And you think, ‘Oh, Jan, S&P 500 – it’s so obvious. So easy to price.’,” he added. “But someone has to make a market in it, and someone’s got to make money making a market in it, so it’s not just that [someone] can create a tokenized real-world asset of anything, it’s who’s providing the market structure around the liquidity.”

The CEO highlighted the second major obstacle in real-world asset tokenization as the challenge of finding a market location that avoids a “regulatory headache.”

“In the world today, you’re not doing that in the United States,” van Eck said. “That’s fine. My bet is on Europe just because it’s got a large retail market as well as having a regulatory structure that enables crypto investing and trading.”

Van Eck continued by saying that he “wishes he could figure out a path to tokenize ETFs,” but that the aforementioned obstacles would still apply.

VanEck is among the 11 firms that obtained approval from the SEC to introduce a spot Bitcoin ETF earlier this month.

Tokenization of Real-World Assets Could Become a $15 Trillion Market

Despite the challenges, many people think the tokenization of real-world assets will become a thriving sector in 2024 and beyond. One such industry insider who thinks RWAs are set for major growth over the next decade is Jasper De Maere, research lead at Outlier Ventures.

During an interview on Yahoo Finance Future Focus, De Maere highlighted that the total addressable market for the tokenization of real-world assets is projected to reach between $10 trillion to $15 trillion by the end of the decade.

“As the technology diffuses across society over the next decade, we believe that it will have a transformative impact on industries such as financial markets, manufacturing, healthcare, and infrastructure,” De Maere said.

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