Alex Malkov from HAQQ Network Discusses the Growth of Tokenized RealWorld Assets and Their Influence on the Market
We had the honor of conversing with Alex Malkov, one of the co-founders of HAQQ Network, a trailblazer in incorporating tokenized real-world assets (RWAs) into the blockchain ecosystem. In this enlightening dialogue, Malkov delves into the driving forces behind the escalating interest in RWAs, the sustainability of this trend, and the transformative influence these assets are poised to exert on both the crypto and conventional financial markets.
The recent surge in interest and overall volume of the tokenized RWAs market is not a sudden phenomenon but rather a culmination of gradual market evolution over the past 8 years. With the emergence of numerous Web3 projects and the evident cost-efficiency advantages for traditional finance, founders and large corporations have been exploring RWA-based solutions for some time, albeit with limited success.
The intrinsic network effect in RWA necessitates a critical mass of buyers and sellers to realize the benefits in terms of liquidity, transaction speed, and costs. Regulatory ambiguity, particularly concerning potential bankruptcy proceedings, has been a significant hurdle, especially for institutional investors. The recent maturation of the crypto market, notably demonstrated by the heightened interest in spot Bitcoin ETFs, has bolstered institutional trust in blockchain technology. Regulatory advancements in the EU, US, and efforts by industry bodies like the International Swaps and Derivatives Association have further clarified the regulatory landscape, fueling the rapid uptick in interest in RWA solutions.
Various real-world assets, such as bonds, commodity-backed stablecoins, and fine art, hold immense potential for tokenization, offering retail investors access to previously inaccessible investment opportunities. Tokenization of fund shares, fractionalization, and pooling can democratize investment in venture capital and private equity funds, while transforming commodity trading into a more globalized and efficient process.
Tokenized RWAs offer the promise of enhanced liquidity, reduced transaction times, and lower trading costs. Platforms like JP Morgan’s Onyx blockchain have demonstrated the potential for real-time settlement and improved intraday liquidity management. Fractionalization and pooling can lower barriers to entry and create new secondary markets, revolutionizing investor behavior and market dynamics.
DeFi platforms can complement traditional financial institutions by enabling low-fee collateralized debt issuance and investment. The Haqq Network ecosystem is pioneering the tokenization of debt and commodities within Islamic Finance frameworks, with plans to launch a gold-backed stablecoin facilitating retail and B2B transactions. The tokenization of Sukuk, a bond-like financial instrument compliant with Islamic Law, holds promise for globalizing and enhancing liquidity in the Sukuk market.
Looking ahead, the tokenized RWA sector, alongside CBDC development and spot crypto ETFs, is poised to contribute to the legitimization of crypto and drive widespread adoption over the next five years. This sector promises expanded diversification opportunities for crypto natives and increased liquidity, transparency, and efficiency for the traditional financial market.
