An Innovative Infrastructure Financing Instrument: Blockchain-Based Tokenization: Fid-Bau Portal

An Innovative Infrastructure Financing Instrument: Blockchain-Based Tokenization

Tian, Yifeng / Zhang, Yuanxin / Minchin, R. Edward / Asutosh, Ashish / Kan, Congwen

The importance of infrastructure to the economic and social development at the local and global scales can never be overemphasized. Infrastructure investment, especially private infrastructure investment in most countries, remains continuously insufficient. Key obstacles to efficient financing of infrastructure projects are traditional finance instruments’ multiple drawbacks. As a derivative of the blockchain technology and a creative financing instrument, tokenization improves transparency, increases access to alternative capital sources, and liquidity, and mitigates counterparty risk through decentralization of infrastructure project financial system. This research attempts to shed light on the potential benefits and obstacles of infrastructure tokenization based on an analysis of the current literature. A conceptual framework of infrastructure tokenization is subsequently proposed to improve the efficiency of infrastructure finance. This research concludes that infrastructure tokenization would tremendously benefit the transportation infrastructure system and concedes that there is a lag in regulatory and technical reform to augment its application. Other researchers and industry practitioners can use the findings of this study as a stepping-stone to further improve the application of blockchain technology in infrastructure finance.