Liquid Network and the tokenization of real assets on Bitcoin. Interview with Arnab Naskar, co-founder of Stokr.
During the Plan B Forum conference in Lugano, Atlas21 met Arnab Naskar, Co-founder of Stokr, to discuss a growing trend aimed at opening new opportunities for investment and innovation: the tokenization of real-world assets on Bitcoin.
What are the advantages of tokenization on Bitcoin compared to traditional finance?
One of the main advantages of tokenizing real assets on Bitcoin concerns the settlement. The settlement of any type of asset in the traditional financial world is not instantaneous. If you operate in the stock market, transactions require more or less long waiting times. On the contrary, if we bring real assets to Bitcoin, for example on Liquid Network, the settlement of a transaction is about 1 minute.
The second advantage are the transaction fees. On Liquid they are less than $0.05. In traditional finance, on the other hand, there are the costs that each broker applies to the various transactions.
Another advantage concerns the ownership of these assets. In the traditional market, when you invest in a security (financial instrument), the ownership remains with the broker or another entity that undertakes to manage it. When you invest in a tokenized security, the token representing the asset can be easily managed through a Bitcoin wallet. This is about applying the concept “Not your keys, not your bitcoins” to securities.
Essentially, with the tokenization of real assets, we obtain greater efficiency and reduce the trust in the traditional market players.
Do you think the players who act as intermediaries in traditional finance are interested in investing in a model that reduces their role in the market?
I think efficiency is part of evolution. The question to ask is: how will the rules change for these market operators? Those who will be able to adapt to the new rules will remain, those who will not be able to will have to leave the market. In the future we will see different rules change: in traditional finance today there is no “service provider” role to tokenize assets. My company, Stokr, covers precisely this role. With the tokenization of assets we will never see the total elimination of trust but a reduction of it.
So is there interest from traditional finance towards tokenization on Bitcoin?
Absolutely. In 2024 we saw BlackRock, the world’s largest asset management company, launch its tokenized fund (BUIDL) that invests in US Treasuries and repurchase operations (repo) and receive significant interest. I believe they are currently managing almost half a billion dollars in assets. BlackRock‘s interest has represented a crucial moment for the tokenization industry. In 2017/2018 it was thought that the traditional market was already efficient enough, but with the entry of players like BlackRock and other asset managers into tokenization, there is a growing awareness that the market is changing. Investors want to reduce costs, have more control and transparency, goals that only digitization can achieve. However, digitization on traditional architectures can introduce new risks of centralized failure. On the contrary, tokenization can offer a decentralized solution, reducing weak points. It is essential to consider what could happen in the event of unforeseen events, such as a “Black Swan event”, and how a resilient infrastructure can support the system in those moments.
Is there a specific reason why you decided to operate in Europe? Do you think the MiCA regulation could help your operations?
We have a license as a VASP, so we are regulated as a virtual asset service provider in Luxembourg. We’ve seen the evolution of the market since 2016/2017, when there was no regulation. Now the European market is preparing for MiCA, which will provide “passporting” capabilities. This means that if you have your headquarters in one country and have the license, you can operate in all European member states. It’s a very interesting aspect, because in the current market, to date, if you are regulated as a VASP in Germany or Luxembourg, the situation is very fragmented. You have to obtain different licenses to operate in different countries, which makes things more difficult. As we know, Europe as a whole is a much larger market. So I think it’s a positive factor.
But the main reason why we chose Europe in 2018 as a jurisdiction is because the capital is still here. I certainly see a lot of motivation in the market to adopt new technologies.
Given that one of the main use cases of Ethereum is tokenization, why do you think this type of market will end up on Liquid or Bitcoin rather than other cryptocurrencies?
I think there are three main reasons. First and foremost, the stability of the Bitcoin architecture, considered fundamental for the financial infrastructure, as a tokenized fund must remain stable over time, avoiding drastic changes such as the transition of a protocol from proof of work to proof of stake. It is essential to have stable and predictable rules.
Another important aspect is liquidity; the institutional interest, highlighted by the significant influx of money into ETFs, strengthens the perception of Bitcoin as sound money. Capital markets can be built on Bitcoin, as it represents the first form of programmable money. If you have programmable money, you can create products that cannot exist in traditional finance. At Stokr we have tokenized MicroStrategy, enabling trading between Bitcoin and MicroStrategy, an option not available in traditional markets.
The third aspect for choosing to use Liquid is the privacy of transactions. As a financial service provider, it is important to protect operations from competitors and front-running traders. Liquid ensures that every transaction is confidential, making it almost impossible for others to identify or speculate on the transactions performed.
If the capital market were to become even more liquid, aren’t you afraid that in the future regulators might try to attack the federation that manages Liquid?
I believe the federation will help the regulator, as the federation members are all identified entities. You can’t risk a North Korean entity becoming a federation member. Therefore, the federation members should not avoid the regulator, but rather should collaborate technically. On the other hand, anyone can be part of the federation as a member, so there are no restrictions. This is the element of decentralization: it is open as long as the collective rules shared by the members are respected.
