JPMorgan's Participation in RWA Signifies a Strong Endorsement of Blockchain, Brickken CEO Says

6 Jun 2024

A vast amount of literature has accumulated upon the subjects of digital assets and real world assets( RWA) tokenization. To this end, several web3 data analytics firms have predicted that the tokenization of RWA is the real estate market of the future.

While the RWA tokenization in the digital asset industry continues to attract significant attention, it is important to discuss some of the key challenges and opportunities that come with it. In this interview, Brickken CEO Edwin Mata Navarro shares valuable insights into the challenges and opportunities in RWA tokenization.

Edwin, can you recall how your journey to the digital asset industry began?

As a former M&A lawyer, I witnessed firsthand the inefficiencies in asset management and capitalization, which highlighted the need for more streamlined and transparent processes. Pivoting into the tech sector, I saw the potential for optimization across various verticals.

While working at an electronic signatures company, a proof of concept involving blockchain made me realize how crucial this technology was for optimizing our day-to-day operations, especially in sectors like law and finance that still rely on legacy systems. This realization led me to explore the transformative power of blockchain technology, ultimately resulting in the founding of Brickken. At Brickken, we focus on tokenizing Real World Assets to unlock their full potential, making asset management more efficient and accessible.

Can you give us an idea of how promising RWA tokenization is before diving into the discourse?

The digital asset industry is poised for massive growth. It's projected that by 2030, around 10 trillion euros worth of tokenized assets will be running on-chain. To put this into perspective, the current market size for tokenized assets is estimated to be over 50 billion euros. Considering we are in the year 2024, this projection indicates an annual exponential growth rate of approximately 192.8%. This remarkable growth trajectory underscores the immense potential and rapid adoption of blockchain technology in asset management​​.

Let's start with some of the challenges. Why is choosing a blockchain for an RWA project a major consideration?

Choosing the right blockchain for a Real World Asset (RWA) project is crucial due to several factors, including gas fees, which are the costs associated with transactions on the blockchain. Embedding assets on-chain is just one part of the process. You also have to consider capitalization, settlements, distribution of earnings, secondary market transactions, future allocations, and more. High gas fees can make some transactions unfeasible, impacting the overall efficiency and cost-effectiveness of the project.

However, it's important to note that these burdens should not fall on the issuers of real assets alone. For end users, the intricacies of the blockchain, including the specific fees, are typically irrelevant.

The user experience should be seamless, with blockchain functioning as a backend actor. By abstracting the complexity away from users, we ensure that the benefits of blockchain—such as security, transparency, and efficiency—are delivered without the need for users to engage with the technical details directly​​​​.

Major financial institutions like JPMorgan, Citibank and BlackRock are bullish on RWA. What does their participation signify?

The participation of major financial institutions like JPMorgan, Citibank, and BlackRock in Real World Asset (RWA) tokenization signifies a strong endorsement of blockchain technology's potential to optimize legacy financial systems. As financial experts, these institutions recognize that blockchain can revolutionize capital markets by enhancing transparency, increasing liquidity, and streamlining settlement processes.

Blockchain's immutable ledger ensures that all transactions are transparently recorded and can be audited in real-time, reducing fraud risk and building trust among market participants. Furthermore, tokenization allows for fractional ownership, democratizing access to investments and significantly boosting market liquidity.

The efficiency of blockchain enables near-instantaneous settlements, reducing counterparty risk and freeing up capital that would otherwise be tied up during the settlement period. By eliminating intermediaries, blockchain also reduces transaction costs, while smart contracts automate and enforce agreements, further lowering operational expenses.

Additionally, blockchain facilitates global access to financial markets, breaking down geographical barriers and enabling broader participation. This strategic adoption by financial giants underscores their commitment to innovation and their belief in the transformative benefits of blockchain technology for the financial industry​​​​.

People often talk about the UI/UX problem in web3. Do you think blockchain itself should be abstracted away?

Absolutely, blockchain should be abstracted away. Blockchain is just the rail, the technology, the backend—not the selling point. People want simple solutions with minimal steps, presented in terms and actions they understand. One of the biggest obstacles to blockchain adoption has been user experience. To truly unlock the potential of blockchain, the technology must be made as intuitive and straightforward as everyday applications.

We have come a long way, though. We are seeing a lot of innovation in wallet abstraction, for example, with MPC wallets (multi-party computation) and advancements in how blockchain can connect directly to bank accounts and facilitate tokenized transfers and payments.

This ongoing evolution, driven by builders across different segments, brings us closer to a point of complete adoption. Simplifying the user interface and abstracting the complex underlying technology will remove significant barriers, making blockchain accessible to everyone, regardless of their technical knowledge​​.

A RWA company offering its products will have to deal with overlapping regulations in different countries. What's your experience with this?

This is the reason why I have grey hair now. The level of complexity around regulatory compliance is truly abysmal. As an expert lawyer, I can attest to the intricate maze of regulations that must be navigated. For a single asset in a given country, there are numerous applicable regulations, and the complexity increases exponentially when you consider cross-border transactions.

If residents from other countries invest, it entangles the regulatory requirements of those jurisdictions as well. Additionally, if the asset is located in one place but the issuance occurs in another, you must contend with the legal frameworks of both locations. Each country has its own set of securities laws, tax implications, and investor protection rules.

Ensuring compliance means not only understanding these regulations but also how they interact with each other. For example, the legal requirements for KYC (Know Your Customer) and AML (Anti-Money Laundering) checks vary widely between jurisdictions. The process of obtaining the necessary licenses and ensuring ongoing compliance can be a significant burden.

This complexity is why having a robust legal and compliance strategy is crucial for any RWA company operating on a global scale. The regulatory landscape is constantly evolving, and staying ahead of these changes is essential to avoid legal pitfalls and ensure the smooth operation of the business​​​​.

Can you share your experience as CEO?

Nobody can tell you how hard it is until you begin. I started my Brickken journey in 2020, and I am truly a different person in so many aspects. I've learned and developed skills across various verticals—marketing, finance, sales. I've even learned how to build websites and effectively communicate with tech teams. The amount of dedication required is immense because you want every job to be performed to the highest standard.

As you scale, you need to hunt for talent because delegation and trust become critical. Your role shifts to ensuring your entire team performs and excels. Providing them with the necessary tools, access, and support to become their best is paramount. It’s a very hard job because, at the end of the day, you often don’t share all the struggles but at least you do get to celebrate the achievements as a group.

I was once told that being a CEO is the most lonely job, and I can attest to that. But I would also add that it is one of the most gratifying jobs. If you truly build what you envisioned and surround yourself with a team to create something that transcends, then yes, it can be lonely, but it is also incredibly rewarding. Seeing the vision come to life and knowing you played a pivotal role in making it happen brings immense satisfaction​​.

Can you share one of your success stories with us?

One of our standout success stories at Brickken is receiving the highest grant in Spain for technology companies, funded by the Spanish government under the European Union Next Generation Funds. This achievement underscores the impact and potential of our technology. Additionally, we entered the Spanish Financial Sandbox, which is a remarkable feat for a 100% crypto company with a traded token. Our ability to blend seamlessly with the Web3 crypto world, the corporate sector, and public administrations is one of our biggest wins.

We were recently accepted into PwC's program specialized in digital assets and tokenizations, which further demonstrates our true value and commitment to building technology for the masses. Our involvement in the Chainlink Build program and securing partnerships with key players in the asset management field, such as Psalion, Keyrock, and DWF Labs, highlight our broad support and recognition across various sectors.

These successes are a testament to the exceptional team we have built over the years. Their dedication, expertise, and innovative spirit drive our accomplishments. Our journey is supported by many sectors, pushing us to achieve our mission and make a significant impact. Brickken excels because of its team—no doubts about it. But I can already highlight that our biggest success is about to unveil, marking a new milestone in our journey​​.

Any final words?

Yes, the whole world will be tokenized. Witness the transformation as blockchain technology and tokenization reshape industries, democratize access to investments, and create new opportunities for everyone. Stay tuned for the exciting developments ahead.