LATAM markets could be revolutionized through LATAM RWA tokenization since it will decrease expenses and increase access, concludes a new report by Bitfinex Securities.
RWA asset tokenization is bringing new hope to Latin American capital markets. A recent report by Bitfinex Securities El Salvador shows how blockchain technology will reduce costs and break the barriers.
The local economy has been saddled with chronic problems: high fees and complicated regulations, and sluggish transactions that have hindered investment.
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Tokenized securities are supposed to change things. By converting conventional assets such as bonds and equities into digital tokens, markets can be made faster, cheaper, and accessible to more people.
LATAM has Capital Markets Obstacles that are Unseen
The issuance of the Bitfinex Securities Latin America Market Inclusion Report points to fundamental problems that have been foiling investors and businesses.
The report coined the term liquidity latency to explain how capital in lockdown and sluggish markets impede growth. Unnecessary charges and red tape make raising funds time-consuming and expensive.
Complicated policy and small participation reduce opportunities. Market depth and financial literacy are issues in countries like Argentina, Brazil, Mexico, Chile, and El Salvador.
Such constraints do not allow most entrepreneurs to raise a fair amount of capital and investors to enter the field rapidly. The report highlights that systemic obstacles exist that do not allow markets to be efficient.
A Latam LATAM Tokenization gamechanger
Tokenization would be able to rewrite this story. As opposed to using conventional processes, ownership shares in assets are represented using digitized tokens on blockchain.
These digital forms will guarantee transparency, fractional ownership, and easy management.
Prices decrease to an alarming amount. The Bitfinex Securities report shows that the issuance of a tokenized security can require only 2-4 percent of payment, in contrast to the conventional significant costs.
Turnaround times drop to 60-90 days- an astounding change of months or years.
Jesse Knutson, the Head of Operations at Bitfinex Securities, describes tokenization as the opportunity to re-engineer finance in decades because it would make investing cheaper and faster.
This is because this innovation provides a direct connection between issuers and investors and eliminates intermediate parties.
Other countries, such as El Salvador, are leading regulatory developments. Bitcoin was made a legal tender in El Salvador in 202,1, and the Digital Assets Issuance Law was introduced in 2023. This legislation provides a controlled environment of tokenized assets.
Why LATAM May Be on Locating the Tokenization Wave
More than economic returns, Bitfinex experts point to a socio-economic win. Financial inclusion can be increased through tokenization, which frees capital flow and aids underrepresented investors. Tokenization may enhance entrepreneurship and development by the provision of easier market access.
Innovation inconveniences are reduced. Investors have the flexibility of owning portions of assets that they could not get before, but could not because of cost or unavailability. The report highlights the prospect of democratization in Latin America in eight countries.
The transparency and effectiveness of blockchain can enable the capital markets in the region. LATAM may also lead to more international and local involvement, lowering the level of friction and improving liquidity.
