Open-ended funds (OEFs) tokenization can promote financial inclusion in a number of ways:
Lowering investment barriers: Open end funds tokenization can make them more accessible to investors with smaller amounts of capital. This is because tokens can be fractionalized, meaning that investors can buy a fraction of a share in an OEF. This can be particularly beneficial for investors in developing countries, where the average income is lower.
Increasing transparency and accountability: Tokenizing OEFs can make them more transparent and accountable. This is because blockchain technology, which is used to tokenize assets, provides a tamper-proof record of all transactions. This can help to reduce fraud and protect investors.
Improving access to global markets: Tokenizing OEFs can make them more accessible to global investors. This is because tokens can be traded on decentralized exchanges, which are accessible to anyone with an internet connection. This can help to level the playing field for investors in developing countries, who may have less access to traditional financial markets.
Here are some specific examples of how OEF tokenization can be used to promote financial inclusion:
Microfinance institutions: Microfinance institutions can use OEF tokenization to provide more affordable and accessible loans to small businesses and individuals in developing countries. Diaspora remittances: OEF tokenization can be used to make it easier and cheaper for people living abroad to send money back to their home countries. Cross-border payments: OEF tokenization can be used to make cross-border payments more efficient and affordable. This could benefit businesses and individuals who need to send money internationally.