A new report from the University of Pennsylvania’s Wharton School argues that the fast-moving promise of real-world asset tokenization could become a source of instability if ‘24/7 tokens’ are built on top of assets that...
- A Wharton School report warns that tokenizing real-world assets (RWAs) could create liquidity risks if '24/7 tokens' are built on assets that cannot be priced or redeemed quickly.
- The report categorizes RWAs into liquid, money-like, and illiquid assets, emphasizing that tokenization changes market access but not fundamental asset risks, and highlights the danger of 'fast tokens' on 'slow assets'.
- Key recommendations include aligning token trading/redemption speeds with underlying asset liquidity, applying function-based regulation, and sequencing experimentation from liquid to illiquid assets to prevent systemic shocks.
Topics: Scalability, Legal regulatory, Risk default, Market depth liquidity, Investor protection disclosure, Credit counterparty risk
Tags: #whartonschool #rwatokenization #liquidityrisks #247trading #speedmatchingprinciple #illiquidassets #runrisk #regulatoryframework #financialstability #tokenizedassets
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