This year has been like no other. A global health pandemic, multiple stock market shocks, the destabilizing of the workforce and many sectors of the economy. After a year of living with COVID-19, consumer and investor behavior has taken on new characteristics as digital and sustainable business and finance have taken off in parallel.
At a moment like this, emerging technologies such as tokenization and blockchain technology are more relevant than ever – and have been presented with a profound opportunity. As traditional markets are in crisis, investors are seeking refuge in cryptographically sound currencies, propelling bitcoin to new all-time price highs. Meanwhile, alternative asset classes such as ESG (environmental, social and corporate governance) investments have gained ground amongst investors, crossing $1 trillion in funds for the first time on record.
This post is part of CoinDesk’s 2020 Year in Review – a collection of op-eds, essays and interviews about the year in crypto and beyond. Mohammad Raafi Hossain is co-founder and CEO of Fasset, a crypto exchange in the Middle East.
As we continue to witness new highs in the digital asset and ESG markets, it is time to consider whether these two growing sectors have the potential to benefit and support one another.
As impact investments and ESG-friendly funds increase in popularity, the cryptocurrency community has an opportunity to capture some of this momentum through the use of tokenization technology. By leveraging investor appetite for these asset classes, it may be possible to accelerate the maturation of the digital assets sector, along with the acceptance of asset-backed tokens and other digital assets in more traditional financial circles.
Arguably one of the fastest-growing asset classes, ESG investments are expected to reach half of all investor portfolios by 2025, totaling $35 trillion. This is partially the result of more investors recognizing ESG-friendly assets as an…