Introduction to Tokenized Asset Settlement on Ethereum
A new standard transforms Ethereum into a platform for tokenized asset settlement, eliminating the need to wrap assets or use bridges. The new Ethereum standard, ERC-7943, comes at a timely moment, with Nasdaq filing with the U.S. Securities and Exchange Commission to start trading tokenized securities and the Kraken exchange outlining its plans to offer EU users trading tokenized stocks.
Growing Demand for Tokenized Real-World Assets
Tokenized RWA volume is growing at an increasing rate, reaching nearly $28.4 billion between Aug. 10 and Sep. 10, a 6% growth. This rapid volume growth signals institutional appetite for tokenized assets. However, the technology lacked a handy solution for the seamless settlement of tokenized securities.
Ethereum Improvement Proposal 7943
Brickken co-founder Dario Lo Buglio created Ethereum Improvement Proposal 7943, or EIP-7943, an implementation-agnostic framework that allows the use of any token types. The new standard aims to solve the blockchain interoperability problem by eliminating the need for custom bridges and wrappers.
Streamlining Global Trade of Tokenized Assets
The new standard may open the gates for streamlined global trade of tokenized real-world assets. Unlike preceding standards, the new ERC will apply to any tokens regardless of the way they are built. If the standard works as intended, it will halt the market’s fragmentation and accelerate the tokenized RWA era.
Industry Support for EIP-7943
Brickken, Forte Protocol, DigiShares, Dekalabs, FullyTokenized, and Bit2Me are among the companies backing EIP-7943. Dario Lo Buglio says, “Institutions have struggled to meet compliance requirements with blockchain’s open architecture. ERC-7943 bridges that gap. Its modular structure makes integration seamless, and the shared community support gives us the confidence to go live with production-level RWA use cases.”
Companies Implementing Tokenized RWA Trading
Companies and institutions, including BlackRock, Nasdaq, and Binance, are working to provide their clients avenues for trading tokenized securities and ETFs. In May, Swiss company Backed Finance initiated the release of xStocks, tokenized U.S. assets built on Solana.
Recent Developments in Tokenized Securities Trading
The same month, Robinhood Markets and BlackRock made their respective announcements. Robinhood revealed it is working on a solution that will allow its users to trade Arbitrum-based tokenized securities. BlackRock introduced the tokenized version of its money market fund BUIDL.
Big Players Entering the Tokenized Securities Market
The world’s biggest crypto exchange, Binance, joins forces with $1.6 trillion investment management firm Franklin Templeton to launch new products associated with blockchain and regulated tokenized assets. Nasdaq announced a filing with the Securities and Exchange Commission to allow tokenized equities trading. On Sep. 10, Kraken announced the launch of xStocks trading for EU residents.
Impact of Mass Tokenization
As RWA tokenization gains momentum, several key changes will follow. Stocks and ETFs will become more accessible, traded 24/7, with cheaper and faster settlements. Intermediary risks will decrease, unlocking new opportunities for traders and investors to tap into the $257 trillion market using innovative tools.
Regulatory Focus on Tokenized Assets
This shift is prompting policymakers to focus on regulating tokenized assets. In July, SEC Chairman Paul Atkins called tokenized RWAs innovative, while Commissioner Hester Peirce emphasized that tokenized securities must still comply with securities laws. Some U.S. companies are already testing in the EU, but as the U.S. develops its regulations, it will likely help streamline the sector’s growth. For more information on the latest developments in the crypto space, visit bitpulse.