In a recent interview with Cryptonews, financial technology company Parfin’s co-founders, CEO Marcos Viriato and CPTO Alex Buelau, discussed everything tokenization.
They told us how and why tokenization is thriving, how it is bound to alter the financial sphere as we know it, who its most enthusiastic adopters are, what stands in its way to greater adoption, and much more.
The JP Morgan Nod
In September 2024, Parafin raised $10 million Series A led by ParaFi Capital, with participation from Framework Ventures, L4 Venture Builder, and Núclea.
The total funding is may reach $16 million by the end of the second closing, the team said, with $38 million in total funding to date.
The funds, they stated, will allow the team to continue its global expansion, hire top talent, and develop Rayls.
Rayls is Parfin’s blockchain banking platform. It’s “the first EVM blockchain system that unifies permissioned and public blockchain,” simultaneously offering privacy, scalability, interoperability, and decentralization.
Financial use cases include tokenization of financial instruments, central bank digital currency (CBDC), FMI settlements, intra-institution transactions, and cross-border foreign exchange.
Moreover, earlier in November, Rayls was named the best technology for privacy and compliance in JP Morgan’s Kinexys report on blockchain finance (Project EPIC). The report highlighted the blockchain’s comprehensive privacy-led design and modular infrastructure.
“Enterprise-grade privacy and digital identity solutions are critical to unlock benefits of tokenization meaningfully and at scale,” commented Nikhil Sharma, Head of Growth at Kinexys Digital Assets.
The Parafin team added that “with a pro-crypto US administration on the horizon, this acknowledgment couldn’t be more timely—it could signal faster industry adoption and pave the way for innovations in blockchain finance.”
Tokenization is a Force to be Reckoned With
The answers below are provided by Viriato and Buelau.
Cryptonews: What role do you see tokenization playing in the broader financial landscape?
Tokenization will play a transformative role in the broader financial landscape by unlocking liquidity, improving efficiency, and democratizing access to assets.
Furthermore, it enables fractional ownership of traditionally illiquid assets, such as real estate and private equity, while streamlining settlement processes.
The technology will bridge traditional finance and decentralized ecosystems, drive transparency, and foster innovation, paving the way for a more inclusive and efficient global financial system.
CN: How do you see tokenization evolving? What will be its impact outside the crypto/blockchain industry?
In the short term, tokenization is expected to continue gaining traction, particularly in financial markets, as institutions recognize its potential to increase efficiency, liquidity, and transparency.
Over the next five years, tokenization will expand beyond financial markets, fundamentally altering various industries and reshaping traditional business. These include international commerce and trade finance, commodities, real estate, consumer goods, and intellectual property.
Its impact will reshape not only the process but also the way value is exchanged and stored by individuals and corporations.
The transition to a tokenized economy holds immense potential but requires collaboration between regulators, technology providers, and industry stakeholders to unlock its full value.
Tokenization Does Not Compromise Privacy & Compliance – Just the Opposite
CN: What are some common misconceptions you often hear about?
Common misconceptions about asset tokenization include the belief that it compromises privacy, ignores compliance, and operates outside legal frameworks.
In reality, advanced tools like zero-knowledge proofs can ensure privacy, and tokenization can enhance compliance and transparency by complying with KYC/AML, securities laws, and local regulations, often providing more transparency and auditability than traditional systems.
CN: How do you see privacy standards and regulatory compliance evolving in this sector?
Privacy standards and regulatory compliance in tokenization are evolving to balance transparency and data protection.
You can protect data privacy by generating zero-knowledge proofs to attest that particular information is valid without disclosing the data.
Regulatory and compliance frameworks are evolving, especially with the advance of regulations like MiCA [the EU’s Markets in Crypto-Assets Regulation], which set clear compliance rules. These ensure tokenization aligns with global financial regulations.
It’s Simple: Clarity and Liquidity Lead to Adoption
CN: Tokenization is undoubtedly expanding. What potential risks do you foresee?
As tokenization grows, key risks include regulatory non-compliance, cyber security threats, lack of transparency on asset pricing, and market manipulation.
Additionally, challenges in scalability and interoperability could hinder widespread adoption.
Addressing these risks will require robust governance, security measures, and regulatory clarity.
CN: Speaking of adoption, what do you see as the main barriers?
The main barriers to adoption are regulatory uncertainty, lack of standardized frameworks, technological complexity, and resistance to change from traditional institutions.
Education, clearer regulations, and proven use cases will be key to overcoming these challenges.
CN: Also, some industries are slow to adopt asset tokenization. Which ones do you think are the most and the least open to it, and why?
Industries like financial markets, insurance, real estate, and trade finance are more open to asset tokenization due to clear use cases like liquidity and efficiency.
Traditional sectors like healthcare and manufacturing are slower, citing regulatory uncertainty and complexity.
As regulations evolve and awareness grows, adoption across slower industries is likely to increase.
CN: Could you share a specific example of a successful project?
Some successful asset tokenization projects include stablecoins like USDC and USDT. Others are cases such as the tokenization of funds like BENJI from Franklin Templeton and BUIDL from BlackRock.
All those cases bring users instant settlement, higher liquidity, and efficiency in the use of the tokenized assets.
Project EPIC: No Small Feat
CN: What does the Project EPIC recognition mean for the blockchain and tokenization sectors, as well as Parfin and Rayls?
A: Rayls’ recognition by JP Morgan in Project EPIC is a significant milestone for our technology. To be compared against other world-leading technologies in the blockchain space and emerge as the strongest is no small feat, especially as blockchain technology continues to gain dominance.
Getting privacy rights is one thing, but doing so within a greater ecosystem that also supports secure transactions, easy, UniFi’d [unified finance] onboarding, and global application is all the more important. Project EPIC revealed this is now possible.
With Rayls expanding into new markets across EMEA and APAC, Project EPIC and its recognition have laid the foundations for institutions worldwide to know there are tried-and-tested solutions out there that work.
CN: What is Parfin currently working on? What’s in the pipeline?
Parfin and Rayls have really exciting announcements in the pipeline for 2025. Following our successful funding round this year, we’re looking forward to launching bigger projects next year – watch this space.
On the technology side, we are working on solidifying Rayls as a dominant blockchain project in a global context, building on success we’ve seen so far in Latin America, with Drex for example, we’re planning to put Rayls on the global map fairly soon.
From a user perspective, we’re focusing on strengthening our worldwide community, particularly in our target markets across EMEA and APAC.
2025 will see Rayls become bigger and better in more ways than one.
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