Fireblocks, the award-winning provider of digital asset and crypto custody technology, and Tokeny, the leading tokenization solution provider, announced their partnership to provide a turnkey and enterprise-grade solution for tokenization using the ERC-3643 market standard on Polygon.
Institutions seeking to mint and manage permissioned tokens such as digital securities, stablecoins, and loyalty tokens can rely on Fireblocks and Tokeny as technology shields to ensure compliance, security, and control without any technical barriers. As a result, all stakeholders within the value chain will benefit from tremendous improvements in interoperability, automation, distribution, and liquidity.
The capital markets are characterized by fragmented and isolated networks with little interoperability, and much of the compliance and management processes are manual or even paper-based, resulting in inefficient workflows, costly operations, and limited liquidity.
Asset tokenization is the solution to this status quo. It is a process to represent securities on a blockchain infrastructure, allowing them to be owned and transferred directly by the owners. All financial markets will have to digitize their processes and tokenize their assets to remain relevant, according to State Street.
By tokenizing securities, issuers can automate compliance and operation processes, allowing them to largely reduce costs. Roland Berger’s study projects that tokenized equity could reduce EUR 4.6 billion ($4.56 billion) in trading costs by 2030. Imagine the cost savings that all capital markets could achieve combined.
Tokenized securities, however, must be minted as permissioned tokens as these tokens should only allow eligible participants to become holders to comply with securities regulations. The open-source ERC-3643 smart contract is designed for this purpose, performing compliance checks at token levels to ensure that transfers only occur if both investor rules and offering rules are met.
The ERC-3643 smart contracts embed a digital identity system to truly enforce compliance, since eligibility checks are identity-based rather than wallet address-based. By automating compliance, peer-to-peer transfers can be enabled, improving asset transferability and eventually driving liquidity. Moreover, the ownership of permissioned tokens is guaranteed, since ERC-3643-based tokens are directly linked to the digital identity of their owners, even allowing token recovery.
However, the complexity to mint and manage permissioned tokens goes beyond using the ERC-3643 standard. It is crucial for end users to have a platform which scans the blockchain in real time, displays accurate data such as cap tables, and interacts with blockchain for complicated operations via user-friendly interfaces. It can be time-consuming and expensive to build a platform from scratch. The collaboration of Fireblocks and Tokeny intends to address this issue by providing a ready-to-use and scalable platform, driving the adoption of asset tokenization.
Fireblocks integrated Tokeny’s ERC-3643-based tokenization solutions into its platform to allow its 1,300 institutional customers to compliantly and easily issue, manage and transfer their permissioned tokens on Polygon in a matter of weeks.
As Polygon’s partner, Tokeny has brought multiple high quality ERC-3643-based tokenization projects to Polygon network. To name just a few, Enegra’s $28 billion tokenized equity was migrated from Ethereum to Polygon by their team. In May, in addition to tokenizing a million-euro classic masterpiece for a traditional museum, Tokeny also announced to power Jewell to issue bank-grade stablecoins.
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