The adoption of tokenization could address several systemic inefficiencies in Latin American capital markets and enhance investment and capital flow in the region, as noted by Bitfinex Securities.
High fees, complex regulations, and structural challenges like technological barriers and substantial startup costs are impeding investment and capital flow in Latin American markets, a situation referred to as “liquidity latency,” according to the Bitfinex Securities Market Inclusion report released on Thursday.
Real-world asset (RWA) tokenization could mitigate the liquidity latency issues in the region by minting financial and other tangible assets on an immutable blockchain ledger, thereby enhancing investor access and trading opportunities.
Blockchain tokenized financial products promote greater accessibility, transparency, and efficiency, reducing capital raise issuance costs by up to 4% and shortening listing times by nearly 90 days, said Bitfinex. They also have the potential to broaden investor access and create more trading opportunities.
“Tokenization represents a genuine opportunity for a financial rethink,” stated Jesse Knutson, head of operations at Bitfinex Securities, in the report. “It reduces costs, speeds up access, and creates a more direct relationship between issuers and investors.”
Financial gap in the LATAM region. Source: Bitfinex
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Tokenization eliminates capital access barriers for developing economies: Paolo Ardoino
According to Paolo Ardoino, CEO of Tether and CTO of Bitfinex Securities, embracing tokenized financial products can create new capital access opportunities for developing economies.
“For decades, businesses and individuals, especially in emerging markets and sectors, have faced challenges to access capital through traditional markets and institutions,” remarked Ardoino. “Tokenization actively dismantles these obstacles.”
He noted that tokenized products could release capital more efficiently and cost-effectively while offering investors access to higher-yielding products that meet compliance and regulatory standards.
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Bitfinex became the first exchange to obtain a digital asset service provider license under El Salvador’s new Digital Assets Issuance Law, enabling the platform to issue and facilitate secondary trading of tokenized assets.
Tokenized US Treasury bills were among the initial assets offered by the platform, allowing “literally anyone to hedge their savings against the world’s reserve currency.”
Tokenized securities growth projections. Source: McKinsey, Bitfinex Securities
Leading consulting firms consider tokenization a multi-trillion-dollar opportunity.
Tokenized securities could reach a potential market of $3 trillion by 2030 in an optimistic scenario and $1.8 trillion in a base scenario, according to projections from McKinsey cited in the Bitfinex report.
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