Pallavi Thakur, Swift’s Director of Strategy and Innovation, and Julien Clausse, BMP Paribas’ head of Asset Foundry, recently discussed tokenization at the Money20/20 conference, shedding light on the challenges it faces.

In their presentation, Thakur and Clausse acknowledged the significant interoperability obstacles that tokenization encounters, emphasizing the need for solutions at various levels. Thakur, drawing from her previous discussions, highlighted interoperability as a major hindrance to tokenization, noting that tokenization platforms often operate as isolated networks or “islands” that lack communication between each other.

“Tokenization is rapidly gaining traction and is set to revolutionize the securities market,” Thakur stated. However, she pointed out the major obstacle of these isolated “islands” within tokenization platforms that hinder seamless communication.

These isolated networks create interoperability challenges across different levels: the network layer (ensuring communication between diverse networks), the token format layer (ensuring token compatibility across networks), and the data layer within tokens, as mentioned by Thakur. Overcoming these challenges is crucial for the smooth functioning of tokenization.

Both speakers stressed the importance of overcoming the fragmented and divided blockchain environment to ensure the success of tokenization. Clausse echoed this sentiment, highlighting the complexities of achieving true interoperability due to the variety of blockchain projects causing these issues.

According to Clausse, establishing industry standards across diverse blockchains is essential for the future of tokenization. These standards should be based on consensus among industry players and practical applications in the real world.

Thakur and Clausse also emphasized the significance of practical use cases and industry standards for the future of tokenization. They discussed the need for common standards in the tokenization industry and the importance of collaboration to address interoperability challenges.

They shared examples of adhering to industry standards, such as Swift’s tokenization of small-scale renewable energy projects, which have resulted in more efficient and transparent financing and management. They urged the crypto industry to come together to tackle interoperability challenges and move towards a more standardized future.