Explanatory video What is asset tokenization?
What is tokenization and how can in benefit your organization? Watch our explanatory video to discover how.
What is tokenization and how can in benefit your organization? Watch our explanatory video to discover how.
Tokenization is the process of recording claims on the blockchain. This can include claims to tangible assets such as art or real estate, as well as fully regulated financial securities such as bonds and shares.
A so-called token is the representation of one of these assets on a blockchain network such as Ethereum or Polygon. Whoever controls the token, can execute the recorded claims, e.g. transfer it or demand repayment.
Through tokenization, companies can raise capital with easier, faster, and cheaper issuances, and increase their investor network by making investment opportunities more liquid and divisible.
How is it possible? New legal frameworks allow companies to issue tokenized securities without the need for a centralized clearing house or an investment bank! Cutting several intermediaries leads to reduced costs and allows smaller organizations to fundraise with a broader pool of investors!
Finally, given that the tokens are fully digital, they can be traded 24/7 and settlements happen in real-time (no counterparty risk).
While some digital asset classes are not yet regulated, others are already considered fully regulated securities. In Germany, and since 2021, the Electronic Securities Act provides the framework for the tokenization of bonds and fund units. It simplifies the issuance process and reduces the need for intermediaries.
NYALA is one of the first companies allowed to issue digital securities under the Electronic Securities Act. An extension of this law to include equities, is expected to come into law in 2024.
Let us take the example of a full-fledged security such as a bond.
1 – Enter token parameters
First off, the issuer provides the parameters of the security like total volume, duration and nominal value to a BaFin licensed registrar, like NYALA’s Smart Registry. Depending on the provider, this can be done via a user interface, via APIs or both.
2 – Wallets opening and tokens minting
The tokenizing platform then opens wallets, and mints – or issues – the tokens. Finally, the tokenization platform distributes the tokens to the investors’ wallets. The keys to the wallets are safely held at a licensed digital asset custodian.
3 – Trading, events and expiry
Token holders can then rely on a secondary market to trade with each other or with new investors. If the asset has an expiry date – for example in the case of a bond – the issuer can set an automatic expiry in the token’s smart contract, as well as automated coupon payments.
Through the NYALA all-in-one tokenization platform, all the steps described above can be done via our web app and our API.
Connect your existing platform and interface to NYALA's tokenization engine via API for a hassle-free setup or use our web application.
Streamline the investor onboarding process with automated wallet opening requests.
Easily issue tokens to investors using our via our web app or API to minimize manual efforts.
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