Update Aug. 21, 2:23 p.m. UTC: This article has been revised to include a section on stablecoin adoption in Latin America.
According to Bitfinex Securities, the adoption of tokenization may address some systemic inefficiencies identified in Latin American capital markets, thereby promoting investment and capital flow in the region.
Systemic challenges, such as high fees, complex regulations, and structural issues including technological barriers and elevated startup costs, are impeding investment and restricting capital flow into Latin American capital markets, a phenomenon referred to as “liquidity latency,” according to the Bitfinex Securities Market Inclusion report released on Thursday.
The liquidity latency issues in the region could be alleviated by adopting real-world asset (RWA) tokenization, which involves financial and tangible assets recorded on the immutable blockchain ledger, enhancing accessibility and trading opportunities for investors.
Tokenization of financial products on the blockchain offers greater accessibility, transparency, and efficiency, including reducing issuance costs for capital raises by up to 4% and cutting listing times by as much as 90 days, according to Bitfinex. The company posits that tokenization could broaden investor access and create more trading avenues.
“Tokenization provides a unique opportunity in generations to rethink finance,” stated Jesse Knutson, head of operations at Bitfinex Securities, in the report. “It reduces costs, speeds up access, and fosters a more direct relationship between issuers and investors.”
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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 may create new capital access opportunities for developing economies.
“For decades, businesses and individuals, especially in emerging markets, have faced barriers accessing capital via traditional markets and institutions,” Ardoino remarked.
“Tokenization effectively eliminates these barriers.”
He noted that tokenized products could provide access to capital more efficiently and cost-effectively, allowing investors to reach higher-yielding products supported by compliance and regulatory approval.
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Bitfinex was the inaugural exchange to secure a digital asset service provider license under El Salvador’s new Digital Assets Issuance Law, facilitating the issuance and secondary trading of tokenized assets.
Among the first assets tokenized by the platform were US Treasury bills, allowing “literally anyone to hedge their savings against the world’s reserve currency.”
Many of the largest consulting firms view tokenization as a multi-trillion-dollar opportunity.
Tokenized securities alone could reach a potential market of $3 trillion by 2030 in an optimistic scenario and $1.8 trillion in a base case, according to predictions from McKinsey, referenced in the Bitfinex report.
More individuals in Latin America are increasingly turning to cryptocurrencies and stablecoins for financial security.
Stablecoins like USDC (USDC) and USDt (USDT) have become a “store of value” in Latin America, comprising 39% of total purchases on Bitso in 2024, as reported in the third edition of the Latin America Crypto Landscape report issued on March 12.
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