Tokenization: Fueling LATAM Investment Boom?

Tokenization Adoption May Drive More Investment in LATAM Regions

Tokenization could be the key to unlocking significant investment in Latin American capital markets. According to Bitfinex Securities, adopting tokenization can address systemic inefficiencies and boost capital flow into the region.

A recent Bitfinex Securities report highlights that Latin American markets suffer from “liquidity latency,” caused by high fees, complex regulations, technological barriers, and high startup costs. These issues slow down investment and hinder the efficient flow of capital.

Real-World Asset (RWA) Tokenization as a Solution

The report suggests that tokenizing real-world assets (RWAs) – representing financial and tangible assets on the blockchain – could alleviate these problems. Tokenization increases investor accessibility and creates more trading opportunities.

Bitfinex notes that tokenizing financial products can improve accessibility, transparency, and efficiency. Specifically, it could:

• Reduce capital raise issuance costs by up to 4%
• Decrease listing times by up to 90 days

Jesse Knutson, head of operations at Bitfinex Securities, stated in the report that “Tokenisation represents the first genuine opportunity in generations to rethink finance. It lowers costs, accelerates access, and creates a more direct connection between issuers and investors.”

Tokenization Removes Capital Access Barriers

Paolo Ardoino, CEO of Tether and CTO of Bitfinex Securities, believes tokenized financial products can open new capital access opportunities for developing economies.

“For decades, businesses and individuals, particularly in emerging economies and industries, have struggled to access capital through legacy markets and organisations,” said Ardoino. “Tokenisation actively removes these barriers.” He added that tokenization offers more efficient and cost-effective capital deployment while providing investors access to higher-yielding, compliant products.

Bitfinex was the first exchange licensed under El Salvador’s Digital Assets Issuance Law, allowing it to issue and facilitate secondary trading of tokenized assets, with tokenized US Treasury bills among the first offerings.

Multi-Trillion Dollar Opportunity

Major consulting firms see tokenization as a significant opportunity. McKinsey, cited in the Bitfinex report, projects the tokenized securities market could reach $3 trillion by 2030 in a bull case scenario, and $1.8 trillion in a base case.