The rapid rise of tokenisation risks repeating China’s earlier boom-and-bust cycle in peer-to-peer lending unless clear industry standards are established to ensure discipline and innovation, according to a senior Chinese asset manager.
Some multilevel marketing companies in mainland China have already started holding meetings discussing real-world asset (RWA) tokenisation projects over the past year, raising “genuine concerns” that the nascent industry might be heading towards a peer-to-peer-style crisis, said CG Zhou, founder and CEO of CPIC Investment Management (Hong Kong), during a panel discussion on Thursday.
In multilevel marketing, independent distributors sell directly to consumers and earn commissions on their own sales and those of their recruits. Many such businesses have faced criticism over questionable product claims, overpriced products and the fact that participants and customers are exposed to financial losses from fees and unsold stock.
Zhou said such companies’ interest in RWA tokenisation raised concerns because such products were a new form of asset that even the financial industry was only beginning to understand in terms of liquidity, security and quality.
“If the industry does not help [RWA tokenisation] develop in a healthy way, there is a real risk it could once more become a P2P situation,” he said at the Chinese Financial Association of Hong Kong’s annual forum. “P2P in itself is a good innovation, but in our market it became another name for a Ponzi scheme.”
