Correct Option
The correct option is 1, 2 and 3.
[as per provisional answerkey]Explanation
Real-World Asset (RWA) tokenization refers to the process of converting ownership rights of a physical or financial asset into a digital token on a blockchain. This mechanism bridges the gap between traditional finance (TradFi) and decentralized finance (DeFi).
- Statement 1 is Correct: Tokenization utilizes distributed ledger technology (DLT) or blockchain to represent tangible assets (such as real estate, gold, or art) or intangible assets (such as government bonds or carbon credits) as digital tokens. Each token represents a fractional share of the underlying asset, ensuring transparency and immutability of ownership records.
- Statement 2 is Correct: Unlike traditional financial markets that operate within specific business hours, blockchain networks function 24/7. This constant availability allows for continuous trading and settlement. Furthermore, by enabling fractional ownership, tokenization lowers the entry barrier for small-scale investors, thereby promoting financial inclusion by providing access to asset classes previously reserved for institutional investors.
- Statement 3 is Correct: In the Indian context, tokenization facilitates democratized access to high-value, high-growth investment opportunities such as commercial real estate, private equity, and infrastructure projects. By allowing individuals to purchase small fractions of these assets, it diversifies investment portfolios and enhances liquidity in markets that were traditionally illiquid.
Key Takeaway: RWA tokenization leverages blockchain to provide fractional ownership, 24/7 market liquidity, and democratized access to high-value assets, significantly enhancing financial inclusion and market efficiency.