A Brazilian legislator has called for all gold mined in the country to be tokenized. The lawmaker made this proposition in response to illegal mining activities in the country. According to Federal Representative Joenia Wapichana, the new bill will enhance transparency in the sector.
A Bill to Tokenize Gold on the Blockchain
Joenia Wapichana references illegal mining activities in the Amazon, supporting the new bill. According to her, half of the national supply of gold came from the Amazon. However, they are all the products of illegal mining.
Local media platform Boletim Bitcoin reported that gold mining has a severe environmental impact. The soil and water sources are contaminated by releasing harmful elements. In addition, the effect of mercury on the groundwater hinders access to clean water for domestic use.
Furthermore, the lawmaker cited violence and deforestation as one of the many consequences of illegal mining. Reports from the civil rights movement and the national and international press echoed the lawmaker’s sentiments.
As a result, the bill aims to establish new guidelines for mining, trading, and purchasing gold in the country. This would be registered on a blockchain network to ensure compliance and transparent activities.
The lawmaker added that the National Mining Agency would implement a single digital platform.
However, no further details about the blockchain network to be used are revealed, nor the implementation of the policy.
The Rise of Asset Tokenization on the Blockchain Network
Blockchain technology provides multiple utilities for private and public entities to adopt and use. Among the many features is asset tokenization.
Institutions or companies can issue tokens representing different products like securities, commodities, or stocks.
Due to this, the gold market has embraced tokenization to clean up the system and ensure efficiency. And the emergence of blockchain-based cryptocurrency has brought about the tokenization of assets.
Gold-backed tokens are gaining traction among investors and traders in the equity market. Not only is tokenized gold popular, but it has also entered new markets and gives people the opportunity to invest their funds.
Most financial analysts believe that tokenization started with gold and blockchain-based tokenization is an added advantage. According to estimates from market experts, over $544 trillion in assets will be tokenized in the coming years.
Financial regulators are beginning to create policies and infrastructure to accommodate the new development. Moreover, the time has come for the adoption of tokenized assets by institutions.
But it would require clear enough guidelines, just like any newly created asset. The tax process, security system, and regulatory frameworks are needed across the board for its adoption. Investors need a fast way to navigate the sector to prevent issues of loss of assets.
Gold has for long been a trusted store of value among investors. It is highly regarded over fiat in times of economic instability and turbulence.
With the tokenization of gold on the blockchain, asset owners are guaranteed unhindered access to their funds.
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