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How to Mitigate the Unique Risks of Tokenized Assets

As the market supply advances along the adoption curve, it becomes increasingly clear that the lack of data availability, data analytics and data quality significantly complicates the implementation of structured due diligence and monitoring processes for investors. This leads to different risk exposures throughout the lifecycle of tokenized assets. These risks are evident in the creation of new assets, modifications to asset characteristics, the contractual terms of issuance, trading, custody and the valuation of underlying assets.

Investors must familiarize themselves with the potential risks along the value chain and the intermediaries involved. By understanding the unique product structuring inherent in the origination, manufacturing, and distribution processes is essential, as well as their implications for operational infrastructure, valuation mechanisms, regulatory frameworks, fiscal compliance, and execution, investors can mitigate risks and increase the trust of their respective share- and stakeholders to allocate liquidity into high-quality offerings.

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