Pallavi Thakur, Director of Strategy and Innovation at Swift, and Julien Clausse, Head of Asset Foundry at BMP Paribas, shared insights on tokenization at the Money20/20 conference.
During their joint presentation, both Clausse and Thakur agreed that tokenization faces significant interoperability challenges that will require multi-level solutions.
Citing themes from her talk yesterday, Thakur cited interoperability as a barrier to tokenization, claiming that tokenization platforms often create isolated networks or “islands” that do not inherently communicate with each other.
“Tokenization is gaining momentum and is poised to transform the securities market,” said Thakur. However, she highlighted a major hurdle: “These tokenization platforms often form isolated ‘islands’ that do not inherently communicate with each other.”
These islands lead to interoperability and exist at multiple levels: the network layer (allowing different networks to communicate), the token format layer (ensuring the compatibility of tokens between networks) and the data layer within tokens, Thakur said. Addressing these layers is essential for seamless operation.
Both speakers emphasized that the success of tokenization depends on overcoming the fragmented and distributed multi-level blockchain environment.
Multi-level problems in different blockchain networks
Clausse echoed this sentiment that different blockchains are causing these problems and emphasized the complexity of achieving true interoperability, citing various blockchain projects as the source of the problem.
“There are multiple levels: network, token format and data within the tokens,” said Clausse. He claimed that the tokenization industry needs common networks and the same acceptance standards.
Establishing industry standards for various blockchains is crucial for the future of tokenization, Clausse said. These standards should come from top-down consensus among industry players and from practical, real-world applications.
Use cases and industry standards
Both speakers agreed on the importance of practical use cases and industry standards for the future of tokenization.
“There are now several standards,” says Clausse. “So everyone is trying to work with unique standards.”
Both speakers cited examples of following industry standards – such as Swift’s tokenization of small-scale renewable energy projects – which can now be financed and managed more efficiently and transparently. They emphasized the need for industry collaboration and urged the crypto industry as a whole to address interoperability issues.