According to the Bank of Russia, tokenized real-world assets can result in new risks, including regulatory challenges and market volatility.
The Bank of Russia warns that the practice could present significant risks as it expands, particularly in terms of the exposure of conventional financial actors to cryptocurrencies and the transfer of money to unregulated sectors.
In a 47-page study report, the central bank emphasized that tokenized assets are not immune to the risks associated with their underlying real-world assets.
Risks like theft, damage, or loss during use, storage, or shipping can affect the security and, by extension, the tokenized asset. The Central Bank of Russia:
“The tokenized real-world asset certifies the rights to the object, but the description of the object may contain errors or inaccuracies that could result in a difference between the original asset and its digital representation.”
Another risk associated with token asset monitoring is the potential for double tokenization, which involves the tokenization of the same asset across multiple blockchains. Despite the growing popularity of tokenized assets, liquidity issues continue to exist.
The Bank of Russia emphasizes that the assets in question are frequently associated with their underlying assets. Consequently, any stress or volatility in the token markets may result in “mass investor actions,” which could destabilize the markets for both tokenized and real assets.
The paper acknowledges that the veracity of price and quality data for tokenized assets may be compromised by the participation of data providers and oracles, despite the fact that it emphasizes the benefits of tokenizing real-world assets.
Oracle data manipulation or inaccuracies may have an effect on market stability, particularly when specific oracles are exempt from national regulations, according to the paper.
The central bank emphasized that there is still a need to increase the tokenization of real-world assets, particularly in the context of the global financial sector.
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