Mark Fidelman on Tokenizing Assets: An Expert’s Insight on the Future of Trading
In this episode of the How to Trade It podcast, host Casey Stubbs interviews Mark Fidelman, the managing director of Smart Blocks. Smart Blocks is a tokenization agency that turns real-world assets into security tokens that can be traded similar to crypto, but with greater safety as every single digital token is whitelisted.
In this interview, Mark talks about how security tokens differ from traditional stocks, the advantages of security tokens over taking a company public, and how tokenizing assets is the way of the future.
Mark has over 25 years of experience in marketing and technology, and has worked with a range of Fortune 500 companies. He is also the CEO of Fanatics Media, a full-service digital marketing agency that helps brands engage with their customers across multiple channels.
In this episode, you will learn about:
- Differences between security tokens and traditional stocks
- Advantages of security tokens over taking a company public
- Process of tokenizing assets
You don’t want to miss it! I like security tokens…you can't really be scammed because every single token is whitelisted, says expert @MarkFidelman. Join us on this episode of How To Trade It to find out more! Click To Tweet
Subscribe to How To Trade It
Security Tokens
Security tokens are digital representations of shares in projects related to real estate or companies that are backed by real assets. The distributions are automatic, and smart contracts enable automatic distribution of profits. The tokens can be traded in and out of without any regulations, and the cost and efficiency of using security tokens are higher than those of traditional IPOs.
Crypto vs. Security Tokens
Crypto is a utility token, not meant to pass the Howie test, which means it is not technically an investment meant to provide returns. Security tokens, on the other hand, are expected to provide profits.
The Securities and Exchange Commission (SEC) has legal frameworks such as Reg J or Reg D to ensure security tokens are legal and regulated. Reg J registry provides exemptions to registering with the SEC, which involves following a legal framework to maintain the exemption. Registration with the SEC is almost like going public on the stock market, as it requires a lot of money and effort.
Bitcoin is a commodity and is too decentralized to be shut down, while XRP is a utility token that serves as a tool to transfer funds between countries. Ethereum is unique because it can be both a platform to build other things and a security token.
This conversation highlights the complexity of the cryptocurrency industry and the importance of regulation to ensure that investors are protected from fraudulent activities. Mark notes that banks, including Bank of America and Citibank, have begun to recognize the potential of tokenization of assets.
Central Bank Digital Currencies (CBDCs) and their negative implications, are controlled by the government, which allows them to freeze all funds instantly if necessary. Mark and Casey suggest that people should reject CBDCs and avoid using them.
Tokenizing Assets
Tokenizing assets is the process of converting real-world assets, such as real estate, artwork, or even stocks, into digital tokens on a blockchain. The tokens can then be traded, bought, or sold like any other cryptocurrency. The tokenization of assets offers several advantages, including increased liquidity, lower transaction costs, and fractional ownership of assets.
The process of tokenizing assets begins by identifying the asset that will be tokenized. This can be anything that has value and can be traded, such as real estate, artwork, stocks, or bonds. Once the asset has been identified, it needs to be appraised to determine its value.
The next step is to create a legal framework for the tokenization. This involves creating a set of rules that govern how the tokenized asset can be traded and what rights the token holders have. The legal framework also needs to comply with any relevant regulatory requirements, such as securities laws.
Once the legal framework has been established, the asset is then tokenized by creating a digital representation of the asset on a blockchain. This is done by creating a unique digital token that represents a share of the asset. The token is then registered on the blockchain, which ensures that it cannot be duplicated or counterfeited.
The tokens can be traded on exchanges or peer-to-peer platforms, allowing investors to buy and sell fractional ownership of the asset. The tokens can also be used to raise funds for the asset, either through an initial token offering (ITO) or a security token offering (STO).
An ITO is similar to an initial coin offering (ICO), where a new cryptocurrency is created and sold to investors in exchange for Bitcoin or Ethereum. In an ITO, the tokens represent ownership in a new project or venture, rather than an existing asset. ITOs are often used by startups to raise funds for new projects or products.
In contrast, an STO is a regulated offering of security tokens that represent ownership in an existing asset. This can include stocks, bonds, real estate, or other assets. An STO is subject to the same regulatory requirements as traditional securities offerings, such as registration with the Securities and Exchange Commission (SEC) in the United States.
Advantages over traditional stocks
The tokenization of assets offers several advantages over traditional asset ownership. One of the main advantages is increased liquidity, as tokens can be traded on exchanges or peer-to-peer platforms, allowing investors to buy and sell fractional ownership of the asset at any time. This makes it easier for investors to enter or exit a position in the asset, without having to wait for a buyer or seller.
Another advantage of tokenized assets is lower transaction costs. Traditional asset ownership often involves high transaction fees, such as brokerage fees, legal fees, and other costs. With tokenized assets, these costs are greatly reduced, as the tokens can be traded directly on a blockchain platform, without the need for intermediaries.
Fractional ownership of assets is another advantage of tokenized assets. This allows investors to buy and sell fractional ownership of an asset, rather than having to purchase the entire asset. This makes it easier for investors to diversify their portfolio and invest in a wider range of assets.
Mark explains the process of tokenizing assets and emphasizes that the tokens need to be tied to something of value. He advises against overvaluing a portfolio and properly devaluing it instead. Companies worth $5 million or more can be tokenized, and they can issue tokens that represent cash flow, dividends, or equity. Tokenizing assets provides greater liquidity to investors who can trade in and out of the tokens with ease.
Ultimately, the tokenization of assets is a revolutionary process that offers several advantages over traditional asset ownership. It allows investors to buy and sell fractional ownership of an asset, increasing liquidity and reducing transaction costs. Tokenized assets can also be used to raise funds for new projects or ventures, through an initial token offering or security token offering. As the technology continues to evolve, the tokenization of assets is likely to become an increasingly popular way of investing in the future.
Subscribe to How To Trade It
People & Resources Mentioned:
Connect with Mark Fidelman:
- Website: https://www.smartblocks.agency/
- Twitter: https://twitter.com/markfidelman
- YouTube: http://youtube.com/@cryptonized1
- LinkedIn: https://www.linkedin.com/in/fidelman/
- Instagram: https://www.instagram.com/markfidelman/
Connect With Casey Stubbs
- Website: https://caseystubbs.com
- Website: https://tradingstrategyguides.com/
- YouTube: https://www.youtube.com/TradingStrategyGuides
- YouTube: https://www.youtube.com/caseystubbs
- Twitter: https://www.twitter.com/caseystubbs
- Facebook: https://www.facebook.com/TradingStrategyGuides
- LinkedIn: https://www.linkedin.com/in/caseystubbs/
Subscribe to How To Trade It
Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Howdy! This is my first visit to your blog! We are a team of volunteers and starting a new initiative in a community in the same niche. Your blog provided us useful information to work on. You have done a marvellous job!