PANews reported on April 9 that according to CoinDesk, Moody's credit rating agency noted in a Wednesday report that while tokenization of funds is thriving, serious risks accompanying this development cannot be overlooked. Cristiano Ventricelli, Moody's Vice President and Senior Analyst, stated that when evaluating tokenized funds, investors need to weigh their benefits against risks arising from underlying technology, security, scalability, and regulatory changes.
Moody's mentioned that many fund managers lack experience in the early stages of the tokenization market, with small teams and short track records, presenting key personnel risks. This includes excessive dependence on a few individuals, where the departure of key executives or weak governance structures can undermine fund stability. Therefore, they urge fund teams to distribute responsibilities and strengthen risk management. Blockchain interruption is another risk stemming from technological novelty. While smart contracts can improve operational efficiency, they are vulnerable to coding defects or malicious attacks. Using public, permissionless blockchains may enhance accessibility but increases potential attack risks. Moody's recommends maintaining off-chain backups and conducting strict smart contract audits. Redemption mechanisms are also a weak point. Moody's encourages tokenized funds to allow redemption in both stablecoins and fiat currencies to mitigate the impact of stablecoin depegging or blockchain interruptions. Additionally, tokenized funds operating across different jurisdictions face varied regulatory requirements, with patchwork regulations increasing the risk of legal barriers to investor claims. Some funds adopt structures giving token holders direct claim rights to underlying assets, but their enforceability depends on local laws and the comprehensiveness of fund documentation.
