Federal Reserve Warns of Leverage Risks in Asset Tokenization and RWA!

Writer: Mustafa Mulla

Mustafa has been writing about Blockchain and crypto since a few years. He has earlier buying and selling expertise and has been working within the Fintech business since 2017.

Sep 20, 2023 10:22

The Federal Reserve has launched a working paper that highlights some great benefits of asset tokenization and risk-weighted belongings (RWA) within the monetary business. The report states that tokenization can decrease funding thresholds, promote standardization, enhance liquidity, add new capabilities, and promote lending. Nonetheless, it additionally warns that the redemption mechanism and liquidity of those belongings might convey larger leverage dangers and have an effect on monetary stability. The report highlights the necessity for satisfactory regulation and oversight of the tokenized asset market to safeguard towards potential dangers.