 Asset tokenization can unlock financial inclusion for LATAM’s unbanked 
2025-01-22
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Asset tokenization may transform Latin America’s financial systems and the broader economy, according to a report published by Mastercard and Ava Labs.
On Jan. 21, payment services giant Mastercard issued a white paper co-authored by Ava Labs, the company behind the layer-1 Avalanche blockchain. The report emphasized the importance of blockchain-driven asset tokenization technology in finance, stating:
Driving financial inclusion through asset tokenization
In developing markets such as Latin America, asset tokenization can lower barriers to entry into capital markets, especially for unbanked individuals. 
Additionally, the report cited three primary reasons for institutions to opt for tokenization: increased transaction and settlement speed, fractional ownership and reduced risks associated with siloed systems and manual processes.
Asset tokenization can bring significant socio-economic benefits to Latin America by re-establishing trust and transparency, which have historically been hindered by systemic inefficiencies.
Overcoming systemic inefficiencies with blockchain solutions
For example, transferring ownership of non-cash assets, such as real estate properties, can help enable a more inclusive financial system, allowing a widely unbanked population to participate directly in these markets in a permissionless manner. 
The report also noted that Brazil, Argentina and Mexico are among the top 20 countries with the highest crypto adoption. Still, local regulators are yet to adapt to the crypto economy. 
According to the report, tokenization is bringing RWAs into decentralized finance (DeFi), unlocking borrowing, lending and trading opportunities. Still, regulatory uncertainty, technological complexity and interoperability stand as some of the primary challenges in the asset tokenization space.
Addressing institutional requirements underscores a need for scalable, privacy-preserving solutions. Check out Cointelegraph’s beginners’ guide to learn more about converting real-world assets into digital assets.
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