Update Aug. 21, 2:23 p.m. UTC: This article has been revised to include a section on the adoption of stablecoins in Latin America.
Adoption of tokenization could address certain systemic inefficiencies in Latin American capital markets, potentially boosting investment and capital flow, as per Bitfinex Securities.
Issues such as high costs, complicated regulations, and structural barriers—like technological challenges and steep startup expenses—are hampering investment and restricting capital movement in Latin America, a situation identified as “liquidity latency,” according to the Bitfinex Securities Market Inclusion report published on Thursday.
The challenge of liquidity latency in the region may be alleviated through the adoption of real-world asset (RWA) tokenization, which refers to financial and physical assets represented on an immutable blockchain, thereby enhancing investor accessibility and trading opportunities.
Blockchain-tokenized financial products introduce increased accessibility, transparency, and efficiency, potentially reducing fundraising costs by up to 4% and cutting listing durations by as much as 90 days, according to Bitfinex. The firm asserted that tokenization could broaden investor access and create additional trading opportunities.
“Tokenization represents a unique opportunity to redefine finance after generations,” stated Jesse Knutson, head of operations at Bitfinex Securities. “It reduces costs, speeds up access, and forms a more direct link 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, adopting tokenized financial products could create new capital access pathways for developing economies.
“For years, businesses and individuals, especially in emerging markets, have faced challenges in accessing capital through traditional markets and organizations,” Ardoino remarked.
“Tokenization actively removes these obstacles.”
He emphasized that tokenized products could unlock capital in a more efficient and cost-effective manner while enabling investors to access higher-yielding offerings backed by compliance and regulatory approvals.
Related: Ex-White House crypto director Bo Hines takes Tether advisory role
Bitfinex was the first exchange to obtain a digital asset service provider license under El Salvador’s new Digital Assets Issuance Law, which permitted the platform to issue and facilitate secondary trading of tokenized assets.
Tokenized US Treasury bills were among the first assets to be tokenized on the platform, aimed at enabling “literally anyone to protect their savings against the world’s reserve currency.”
Major consulting firms view tokenization as a multi-trillion-dollar opportunity.
According to predictions from McKinsey, cited in the Bitfinex report, tokenized securities alone could reach a potential market size of $3 trillion by 2030 in a best-case scenario, or $1.8 trillion in a base-case scenario.
More individuals in Latin America are increasingly turning to cryptocurrencies and stablecoins for financial security.
Stablecoins like USDC (USDC) and USDt (USDT) have emerged as a “store of value” in Latin America, comprising 39% of total purchases on Bitso in 2024, as reported in the exchange’s third edition of the Latin America Crypto Landscape report issued on March 12.
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