Dec 18 (Reuters) – On the Chinese tropical island of Hainan, Huanghuali trees – a rare kind of rosewood – are being photographed so that they can be turned into digital assets.
Huanghuali or “yellow flowering pear” produces wood with a beautiful lustre and golden sheen. Favoured by Chinese emperors in times past, the wood continues to be highly prized. But a tree takes decades to mature, testing the patience of farmers.
Converting the Huanghuali into real world asset (RWA) tradeable tokens would bring capital to an industry facing cashflow problems, says Zhao Xiaobao, the Hainan representative for Geely Technology Group, a unit of Chinese automaker Geely.
“We are converting the dormant resource of precious wood into tradeable assets,” Zhao said, adding that the tokenisation business model could revolutionise the forestry industry and “turn green mountains and clear waters into gold and silver.”
His company aims to raise HK$100 million ($13 million) in an initial tranche of tokens to be launched in Hong Kong in the next few months. Each tree will be assigned a different value, depending on its size and quality, which would then be broken up into a number of tokens.
BAIJIU LIQUOR, ARTIFACTS, COLLECTABLES
Geely Tech’s plan, Zhao believes, could mark the world’s first tokenisation of tradeable real world assets that are biological in nature.
It’s also not just prized trees. All sorts of Chinese goods, from fine tea to expensive baijiu liquor, are now being turned into digital assets.
“Artifacts, collectables, data assets, commodities and real estate – we have received many enquiries about how to tokenise these assets,” Liao Renliang, a lawyer at Yingke Law Firm, told a seminar on the topic last month.
While many Chinese companies appear excited about this new avenue of funding that has opened up for them in Hong Kong since last year, blockchain-based RWA tokenisation is very much in its infancy. In particular, it remains unclear whether a potential onslaught in supply will be met with sufficient demand, given limits on investment from mainland China.
“There are way more assets …. than investors willing to buy them. We need to expand the investor base,” said Eric Zuo, managing director at Tadwill & Co.
Zuo is working on a project that is seeking to raise 523 million yuan for a bankrupt hydro dam in Sichuan province via digital tokens in Hong Kong.
MAINLAND CONCERNS
The global RWA market has surged 115% over the past year to $35.7 billion, according to data provider RWA.xyz. RWA tokens are mainly backed by traditional financial assets like bonds, stocks and real estate, with U.S. Treasuries accounting for the lion’s share.
finance.yahoo.com
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