The Future of Investments: Tokenisation of Real-World Assets

One of the most exciting developments in asset management is the tokenisation of real-world assets. This revolutionary technology uses blockchain to convert ownership rights of physical assets, like real estate, data, or even investment funds, into digital tokens. These tokens offer new opportunities for accessibility, liquidity, and efficiency in markets.

At a recent Legalwise Seminar, Grayson Clements’ Associate Philip McHugh, alongside blockchain expert Jeremy Muir of MinterEllisonRuddWatts, delved into this growing trend and its legal implications for businesses and investors.

What Is Asset Tokenisation and Why Does It Matter?

In simple terms, tokenisation is the process of turning physical assets into digital tokens stored on a blockchain. This innovative approach can be applied to a wide variety of assets, including:

• Real estate properties
• Intellectual property (music rights, patents, etc.)
• Investment portfolios and funds
• Voting and governance systems

The primary advantage of tokenisation is that it makes traditionally illiquid assets more accessible. Digital tokens can be traded easily, creating new opportunities for investors and businesses to access previously untapped markets. Additionally, tokenisation enhances security through blockchain technology, ensuring transparency and traceability in transactions.

Legal Insights from the Seminar

The seminar highlighted several critical legal considerations surrounding tokenisation, especially within the New Zealand context. While New Zealand offers a relatively straightforward securities framework, it’s crucial for businesses and investors to have the right legal guidance to navigate this complex space. For instance:

• The importance of legal structuring: Effective legal frameworks can protect token holders, as seen in the case of NZ’s Cryptopia exchange, where users’ tokens were safeguarded during liquidation.
• Regulatory approach: The Financial Markets Authority (FMA) is adopting a supportive stance, guiding businesses through compliance, whereas the NZ government seems to be waiting to adopt regulations implemented by other countries.
• Global comparison: New Zealand’s securities regime is far less restrictive compared to jurisdictions like the US, providing a unique opportunity for businesses looking to lead in this space.

These insights are vital for anyone considering tokenisation for their business or portfolio. Legal issues are still developing, but seeking expert advice early can help mitigate risks and unlock new opportunities.

Looking Ahead: Digital Assets in Institutional Portfolios

As tokenisation becomes more mainstream, digital assets are expected to become a significant component in institutional portfolios worldwide. In New Zealand, this could mean increased opportunities for both local and international investors. The question remains: Will New Zealand lead the way in adopting tokenisation, or wait for international trends to shape our markets?

Access the Full Seminar Replay

For a more in-depth look at how tokenisation is transforming asset management and what it means for your business, you can access the full seminar replay here.

If you’re seeking legal advice on blockchain, tokenisation, or digital assets, get in touch with Phil McHugh at Grayson Clements. Our team is here to help you navigate the evolving legal landscape and unlock the potential of these new technologies.