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World Federation of Exchanges says tokenization’s main benefit is fractionalization

tokenization benefits

The World Federation of Exchanges (WFE), the global trade body for stock exchanges and clearing houses, today published a paper on tokenization. On balance it was critical of the concept, although it concluded that it “may be the next phase for traditional assets”. It found that the primary benefit of tokenization is fractionalization. And by making fractional assets available to a larger pool of investors, there’s potential to enhance liquidity. However, it dismissed several other tokenization benefits.

Some might conclude that as incumbents, the WFE members could view tokenization as either a threat or a potentially significant cost. The paper notes that few exchanges have embraced the technology. However, there are a few exceptions. For example, Switzerland’s SIX and the Deutsche Börse are WFE members and early adopters.

Notably, the primary benefit acknowledged by the WFE doesn’t impact most of its members. Fractionalization often relates to private or illiquid markets in which they don’t have a significant presence.

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