Utilization of Tokenization, Securitization Processes To Offload Risk Burden!

Securitization is a process by which Banks or alternative charge players categorize Asset-backed non-performing loans into three categories(AAA, BBB, CCC) and sort them based on their functionality history. Once sorted these asset-backed loans are available to a third party called SPV. These third parties will now pool these unsettled asset-backed loans and categorize them based on their prospective value in the secondary market.
This manner borrowers can offload their highly illiquid assets into liquid ones, and minimise the creditrisk.



Challenges in securitization Securitization could be a very cumbersome Procedure for both creditors and SPVs, as it involves too much sophistication, thus auditing gets quite hefty. And there are not any proper checks and balances that produce the process of securitization tricky.

Tokenization: a saviour
Tokenization is a procedure for converting assets into digital format by assigning every asset a token. The process makes it possible for the owner of the advantage to have several ownerships, this not only reduces the danger attached to a certain asset but additionally optimizes its liquidity in the market.

Business-related rules and processes are also coded and attached to a Token with its underlying processes. This maximises the speed of this transaction. In this manner transfer of ownership too gets easier with encoded tokens and reliable info connected to them.

Legislation Utilizing tokenisation

Following Cryptocurrency regulatory steps also get simpler with tokenisation coming To the drama, as"know your customer" and other regulatory compliances can also be encoded into the tokens.

Use of Corda to tokenise an advantage

Corda is a program That Allows arrangements between issuer and holder of token. Corda supports two different types of token first being asset-backed tokens and the other one is resources that are directlyissued by participating parties.



The use of securitization using tokenisation gives a security framework to Borrowers and creditors.