Both Russia and other countries are increasingly interested in the tokenisation of conventional assets as a form of digital investment. The transformation of physical assets into digital tokens enhances their liquidity and accessibility to a broader range of investors. In its report, the Bank of Russia examines global and Russian trends in the tokenisation of real-world assets, proposing discussions on the specifics and prospects of this development.
The advent of distributed ledger technologies has accelerated the growth of the digital assets market. Initially focused on cryptocurrencies, it has evolved into a virtual universe with diverse participants and products. Today, almost any material object can be digitally represented on a blockchain. A token acts as an entry in an information system, granting an investor rights such as receiving a real asset or income from its use, ownership rights to the object itself, or certain privileges as a co-owner of a company. Tokens are already issued for exchange-traded commodities like gold and grain, real estate, art pieces, wine, and other uniquely characterized assets in various countries including Russia. However, widespread adoption remains premature.
Globally, attitudes towards tokenising traditional assets are still developing. There is no universally accepted definition or classification for it nor common regulatory approaches. While central banks in jurisdictions with mature digital markets either create specific rules or apply existing regulations, representing ownership through tokens may necessitate additional infrastructure adjustments. In Russian legislation, the digital rights framework—covering digital financial assets and utilitarian hybrid digital rights—is well-suited for tokens. This framework allows for digitising various rights to objects currently; however, issues concerning individual assets remain to be addressed.
The authors explore the economic and legal nature of tokenised assets by considering their benefits and risks while analyzing practical cases to comprehend this phenomenon's specifics and potential fully. At present, they do not plan to propose specific regulatory measures for this emerging segment.
The Bank of Russia invites discussions on potentially tokenising certain real-world assets while considering their unique characteristics and requests comments from readers by December 27th, 2024.