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Tokenization of ABS Underlying Assets

In: Proceedings of the 2023 5th International Conference on Economic Management and Cultural Industry (ICEMCI 2023)

Author

Listed:
  • Jie Cui

    (The University of Sydney, NSW)

Abstract

This study proposes a potential blockchain-based solution to address informational inefficiencies in traditional ABS (asset-backed securities) markets, including, lack of transparency, illiquidity and information asymmetry. By dividing ABS assets into small tradable units on a blockchain network, peer-to-peer trading via smart contracts is enabled, which lowers costs while improving liquidity, transparency, and security over conventional ABS issuance. Based on an analysis of the cryptocurrency issuance on the blockchain network, this paper explores technical principles and potential applications of smart contracts that are capable to ensure the security and efficiency of ABS primary-market issuance and subsequent secondary-market transactions. I also discuss the potential risks such as global regulatory uncertainties, restrictions, and potential technological concerns regarding asset tokenization and cross-border transactions. Overall, while ABS tokenization may address some persistent challenges in traditional ABS markets, expanded analysis and further study are warranted to assess the economic impacts and address regulatory challenges across borders to realize blockchain’s transformational promise in capital markets.

Suggested Citation

  • Jie Cui, 2024. "Tokenization of ABS Underlying Assets," Advances in Economics, Business and Management Research, in: Feng-xia Cao & Satya Narayan Singh & Ahmad Jusoh & Deepanjali Mishra (ed.), Proceedings of the 2023 5th International Conference on Economic Management and Cultural Industry (ICEMCI 2023), pages 653-664, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-368-9_78
    DOI: 10.2991/978-94-6463-368-9_78
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