Bank of America Forecasts Transformative Role of Tokenization in Finance
According to a recent research report by Bank of America (BofA), tokenization can revolutionize financial and non-financial infrastructure and financial markets in the next five to 15 years.
The report highlights the transformative power of tokenization and its wide-ranging implications for various sectors.
Tokenization, an application of blockchain, involves converting real-world assets or rights into digital tokens on a blockchain network. These tokens represent ownership, value, or other rights, enabling secure and transparent asset tracking and transfer.
Bank of America's Cryptocurrencies Research Team believes we are on the verge of a transformative infrastructure revolution that will redefine value transfer, settlement, and storage across all industries.
Released on June 29, BofA's research report emphasizes that tokenization could reshape how assets are managed and traded over the next decade. This technology has the potential to enhance efficiency, increase liquidity, and reduce transaction costs across a wide range of markets.
"The tokenization of traditional assets and issuance of assets in tokenized form have the potential to increase efficiencies and reduce costs across an asset's life cycle, improve the efficient allocation of capital, optimize global supply chains, catalyze a new generation of software-as-a-service (SaaS) companies and ultimately drive mainstream adoption," the analysts wrote.
In financial infrastructure, tokenization can streamline settlement, clearance, and custodial services. By digitizing assets and representing them as tokens, the traditional complexities associated with intermediaries and paperwork can be minimized, leading to faster and more efficient transactions.
Bank of America points
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