Sat. Jun 15th, 2024

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By Gerelyn Terzo, Benzinga

The tokenization of financial assets has been a game changer for investors and business owners alike. This technological innovation has paved the way for both individual investors and entrepreneurs to go further than they could before the advent of blockchain.

Tokenization includes a type of fractional ownership in which investors hold a piece of an asset rather than needing to be able to afford the entire cost of a high-priced asset, like a piece of land. As a result, investors share the costs and rewards with other members. Additionally, tokenization represents a tool for businesses to enter the digital age and create new opportunities for stakeholders. In this growing space, companies like Diamond Lake Minerals (OTCPK: DLMI) are at the forefront of innovation and the digital revolution.

Tokenization Overview

While tokenization and cryptocurrencies like Bitcoin are often associated, theyre not synonymous. Bitcoin, the maiden cryptocurrency, is a decentralized digital asset that can be exchanged for payments on a peer-to-peer network without the need for a third party like a bank. Bitcoin is the digital currency underpinning the blockchain that bears its name.

While tokenized assets similarly transact on the blockchain, they serve a different purpose than Bitcoin. Theyre representations of physical assets including anything from real estate to gold to fiat money like the dollar or euro that are converted into digital form. Tokenized assets are disrupting financial services across securities settlements, investments and payments.

As big as Bitcoin is, with a market cap of $1.3 trillion, tokenization has the potential to be 100 times bigger, according to Larry Fink, CEO of the worlds biggest asset manager, BlackRock.

Banks Embrace Tokenized Assets

While major financial institutions were slow to warm up to the idea of digital assets and the blockchain, theyre starting to come around. Theyre drawn to the features of a decentralized ledger, including cost efficiency, speedy transaction settlement times and security, thanks to the immutable nature of the blockchain. In hindsight, it was only a matter of time before they came on board. In addition to Wall Street banks, central banks have taken notice, too.

Most recently, a trio of major firms, JPMorgan (NYSE: JPM), Deutsche Bank (NYSE: DB) and BNP Paribas, have partnered with the European Central Bank (ECB) to test the mettle of blockchain technology for settling security transactions in the financial markets. This groundbreaking experiment not only has the potential to disrupt securities settlement when assets like stocks and bonds are traded, but it could also help bring clarity to the role of digital assets in the global financial system.

The bank project remains in the early stages and is expected to unfold through Q4 2024. In the meantime, it sends a message to other banks and central banks that it wont be long before blockchain technology is more fully integrated into the financial markets. Payments arent too far behind, either.

Mastercard (NYSE: MA) has been making strides in tokenizing fiat payments on the blockchain. The card giant, along with partner Standard Chartered in Hong Kong, completed an experiment for tokenized bank deposits on the blockchain using the Mastercard Multitoken Network (MTN), which comprises a set of tools designed to support this process.

As part of the test program, Standard Chartereds digital arm, Mox Bank, purchased a carbon credit, in turn requesting its tokenization by yet another subsidiary, Libeara. The tokenization of the carbon credit was fulfilled through MTN via an atomic swap between the two instruments, the carbon credit and digital asset.

The deposit, which was overseen by the Hong Kong Fintech Supervisory Sandbox, was successfully completed. It is a step toward the tokenization of real-world assets, according to Standard Chartered CEO Mary Huen, ranging from carbon credits to the transfer of loans.

The involvement of the Hong Kong regulator demonstrates both the need for oversight in the tokenization of the monetary system and the role that gatekeepers will play.

Diamond Lake Minerals Pioneers Tokenization

While banks and card networks might only now be dipping their toes into the tokenized waters, companies like Diamond Lake Minerals (OTCMKTS: DLMI) are already making strides. Diamond Lake Minerals has been extremely focused on tokenization since August of 2023, when Brian J. Esposito took over as CEO and transformed the companys vision and strategy. Esposito has been pioneering this approach over the last decade, bridging traditional finance and digital assets.

In Salt Lake City, Utah, Diamond Lake Minerals, led by Esposito, is heavily involved in the regulated digital asset space, bringing opportunities like registered security token offerings to investors. DLMI stock is one way for investors to potentially gain exposure to the blockchain without having to go too far down the rabbit hole on digital wallets and security.

Importantly, the blockchain space remains a nascent playground in which the rules are still being written. Diamond Lake prioritizes the regulatory guardrails that exist, erring on the side of caution so theres no gray area.

We look at everything as a security because we want it to have value. We want it to be backed by real assets and we want it to create a return, said Esposito in a recent podcast.

Most recently, Diamond Lake Minerals has teamed up with modular home developer BOXABL in an alliance through which entire communities BOXABL Villages, as theyre called are being developed and financed. Theyre using a combination of security tokens and traditional means, a technology-fueled balance of liquidity that the company believes is especially valuable in the current high-interest rate environment. This confluence of modular homes and digitalization accelerates the homebuying process while providing much-needed affordable housing supply to the market.

Investors who are looking to add diversification to their portfolios or business owners interested in pursuing tokenization for their real-world assets may want to look at Diamond Lake Minerals to see if it matches their goals and risk-reward profile.

Featured photo by HoAnneLo on Pixabay.

Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.

This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.

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