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Jan. 11th, 2022
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5 min read
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Two different innovative approaches, one goal: a world where assets, digital or physical, are connected, digitized, and now accessible to more people than ever. Asset tokenization is the process of converting ownership of an (real world) asset into digital tokens on various blockchains depending on the type of asset, use case, or regulatory requirement. Different blockchains offer different advantages of blockchains in terms of security and scalability where each token represents a fractional share of the given asset.
Tokenization is constantly advancing both alternative and traditional asset markets, while making investing more transparent and efficient. Whether it is about financial securities or your favourite limited-edition sneakers / rare sneakers, digital assets are helping us reimagine the world of ownership and investment possibilities. It can be done through different regulatory frameworks, depending on the asset type and the structure of the tokenized assets investment. For example, in regulated digital securities, compliance with established regulations is critical, whereas alternative assets like collectibles often follow a different model.
A real-life example of this can be seen through Timeless and NYALA’s innovative approaches to tokenization. NYALA, which specializes in tokenization of digital securities that comply with the German Electronic Securities Act (eWpG), helping companies all over the EU turn traditional financial assets like bonds and shares into digital tokens on blockchain, all while ensuring they meet legal and financial regulations related to issuance of securities. NYALA creates digital securities using the eWpG framework, while Timeless specializes in luxury collectibles such as high-end watches, most valuable rare cars, rare whiskies and limited edition sneakers, leveraging blockchain as well, to fractionalize these premium assets.
Timeless allows for the fractionalization of any kind of collectibles, offering investors direct fractional ownership of the assets. By leveraging blockchain technology, Timeless ensures transparency, security, and efficiency in the ownership and trade of high-value collectibles such as luxury watches, rare cars, rare whiskies, and memorabilia.
Asset Tokenization: After purchasing shares, investors own the underlying collectibles in proportion to their investment. Timeless acts as a custodian, managing these assets until their sale.
1. Accessibility: Investors can enter high-value markets without needing significant capital.
2. Diversification: Abroad range of collectibles enables diversified investment portfolio beyond traditional asset classes with very low correlation.
3. Ease of Trade: Blockchain technology enables seamless transactions, providing liquidity in markets previously inaccessible to smaller investors.
4. Security and Transparency: The use of blockchain ensures immutable ownership records and secure transactions.
1. Investors seeking fractional ownership of luxury collectibles, allowing them to participate in exclusive asset classes.
2. Collectors who want to benefit from appreciation in asset value without full ownership responsibilities.
3·. Enthusiasts looking to own a piece of history in a simple and cost-effective manner.
Regulation isn’t just about rules, it’s about trust, structure, and access to serious capital. The eWpG (Electronic Securities Act) provides a regulated framework for tokenizing traditional financial instruments while ensuring legal certainty.
Asset tokenization: In Germany, the eWpG (Electronic Securities Act) gives digital securities the same legal status as traditional paper-based securities. This means that big institutions and investors can easily trust these tokens because they follow financial market rules. eWpG turns high-value assets into fully regulated digital securities, making investing faster, safer, and more accessible.
1. This approach broadens investor reach along with enhancing capital market access.
2. Due toits credibility, it appeals to Institutional interests, defining ownership and transferability within a regulated space.
3. Being registered as a crypto securities registrar with BaFin(Germany’s financial regulator) NYALA offers optimal trust across EU.
4. Built according to European compliance standards provides a committed structure which results in serious trust points for institutional and retail investors.
1.Banks because they expertise in providing unmatched security to them in order to protect their tokenized assets and sensitive data.
2. SME crowdfunding clients making raising capital effortless for them and also reducing expensive custody fees, lowering processing costs and streamlining investor management.
3. Real estate clients in maximizing the return of real estate projects, because their tokenization engine is tailored to the specific requirements of the real estate sector.
Compliance considerations differentiate eWpG securities from fractional ownership models. While the two models serve different purposes, they do overlap. A collector who buys a fraction of a rare car might primarily be passionate about owning a piece of history, but they likely still care about its potential appreciation. On the other hand, an investor buying a company’s stock might not be solely focused on financial returns; they could be investing because they’ve admired the brand since childhood. In both cases, emotional attitudes and an investment strategy go hand in hand. Depending on the type of investment, the investor needs to see which approach fits them best.
Not every asset requires eWpG, but for a full integration into financial markets, it remains the gold standard, at least within the EU. For more details on the eWpG, check NYALA’s blog: Why Are European Companies Choosing Germany’s eWpG License?
At the same time, not all digital asset interactions require the very stringent securities regulation, so it's important to know which model can serve your needs the best! For collectibles, Timeless is setting a different kind of standard that prioritizes accessibility, flexible ownership, and passion-driven investment rather than financial regulation. Investors have distinct needs; hence we need more than one model for tokenization.
Timeless utilizes blockchain technology to offer fractional ownership in collectibles incompliance with existing MiFID (Markets in Financial Instruments Directive) and MiCAR (Markets in Crypto-Assets Regulation) rule sets. By adhering to these regulations, Timeless ensures that investments in fractionalized collectibles maintain transparency, security, and regulatory compliance, fostering trust in the market. For more details about the collectible market, check out the Timeless Magazine section.
Both eWpG-regulated securities and collectible-based fractional ownership have their place in a growing tokenized asset ecosystem: on the one side there is NYALA, ensuring regulated tokenization for financial instruments, and on the other side there is Timeless, democratizing access to rare antiques and valuable collectibles.
Regulation fosters long-term adoption and trust, but overregulation on every type of asset risks stifling innovation. Timeless redefines investing by making collecting accessible, engaging, and diversified. NYALA is the trusted partner for those seeking regulated digital securities solutions.
The future of tokenization isn’t about one method replacing the other. Instead, it’s about building an ecosystem where both can thrive. Whether tokenizing hotel investment bonds or an ultra-rare Rolex, choosing the right framework is the key. Two different approaches united by one main goal: a world where assets, digital or physical, are connected, digitized, tradeable, and now accessible to more people than ever.
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