Why Fasset Focuses Only on Real World Assets

Introduction

In a world increasingly dominated by digital innovations and speculative financial products, the question of asset stability and genuine value creation has never been more pertinent. Amid this backdrop, Fasset has taken a definitive stance by focusing on real world assets. Unlike many crypto platforms that list hundreds and thousands of cryptos, Fasset expertly and selectively curates its offerings, ensuring that only those digital assets are listed that have a real world value, genuine utility, and are real world assets from Fasset’s Shariah analysis.

This decision underscores a philosophy deeply rooted in the belief that true wealth is built on foundations of tangible utility and enduring value. Real world assets are not only fundamental to economic growth and societal development but also provide the most reliable conduit for long-term wealth accumulation.

The allure of quick gains through speculative investments can be tempting. Yet, history is littered with cautionary tales of bubbles that burst when the underlying assets lacked intrinsic value. By contrast, real world assets offer transparent and sustainable value, anchoring investments in the real economy. In this article, we delve into why Fasset has chosen this path and the implications of this choice for investors seeking stability and growth.

Understanding Assets in Shariah

According to Sharīʿah principles, for an entity to be considered an asset, it must inherently provide benefit and utility on its own, without reliance on external factors or third-party interactions.

The Ḥanafī scholars firmly held that for an item to qualify as a valid asset, it must independently offer utility to the counterpart. Thus, an asset is characterised by its inherent ability to provide utility and benefit. This is encapsulated in the definition of 'Māl' which states:

“Mal is that which is normally sought and can be stored to use when needed” [Majallat al-Aḥkām].

Imam al-Sarakhsī (d.483 AH) said, “Wealth refers to all created things that humans can fulfil their needs with” [al-Mabsūṭ].

The utility has to be bundled and captured within a defined construct or a thing. It cannot be abstract, assumed, or theoretical. Considering this, the Ḥanafī jurists resolved that a single grain of wheat is not an asset (Māl) if people do not benefit directly from it (Tamawwul ) [ʿUmdat al-Riʿāyah]. This shows that although a grain of wheat is existing, it is tangible, visible, and storable, the jurists negated it from being Māl unless people use such a thing to derive direct benefit.

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If something was not Māl, it was non-existent, and therefore not tradeable according to the Ḥanafī jurisprudence. Only that which was Māl can be traded, and Māl depended on two factors:

1. Existence

2. Utility

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Hence, given the above, there were only three types of tradable things:

1. Asset (Māl)

2. Money (Thaman)

3. Nothingness (Maʿdūm)

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Money serves merely as a tool for exchange, not as an asset warranting its own yield. In the Islamic financial system, money is strictly a facilitator of trade rather than a tradeable commodity itself. Unlike other assets, money does not possess intrinsic utility; its value is realised only through expenditure or donation. Holding money provides no tangible benefit beyond the psychological satisfaction it may offer. In contrast, tangible assets provide direct benefits and are valued for the utility and enjoyment they deliver while in possession. Money cannot be ‘used’ like other assets. Consequently, when purchasing goods, one compensates for the inherent value and utility they offer. Money, lacking this inherent consumptive value, is valued only at its nominal worth. This principle underlies the prohibition of Ribā, as it emphasises that money should not generate additional value merely through its exchange.

Imam Ibn al-Qayyim (d.751 AH) states:

“Money is never sought for itself; rather, it is used as a means to gain other assets” [‘Iʿlām al-Muwaqqiʿīn].

Imam al-Ghazālī (d.505 H) articulated, “Almighty Allah designed the Dinar and Dirham to facilitate transactions and serve as a fair measure among various goods. These currencies act as a gateway to all other assets; they hold value inherently yet are not sought for their own sake” ['Iḥyāʾ ʿUlūm al-Dīn].

Elsewhere, he mentioned, “Money functions as a mirror, reflecting all but not being reflected upon itself. Its creation serves another purpose: to facilitate the exchange of all other assets as an intermediary” [from 'Iḥyāʾ ʿUlūm al-Dīn].

Understanding Wealth Creation

Wealth creation over the long term is fundamentally anchored in assets that possess intrinsic utility and provide tangible benefits. True assets, by definition, are resources that deliver value through their inherent properties or through income they generate. Examples include real estate that can be used for living or business purposes, stocks representing ownership in companies that produce goods or services, or sukuk that invest in real assets and services of governments or corporations.

The utility and benefits provided by such assets are the bedrock of their value. Real estate gains value from its utility as a space for residences or businesses; stocks appreciate based on the company's ability to grow profits and reinvest in operations; sukuk yield returns through profit over time by the economic activities of the originator. These assets deliver real, measurable, and lasting value because they are rooted in tangible economic activities or properties.

Conversely, assets that lack intrinsic utility or tangible benefits can become speculative vehicles in the short term. Their perceived value is heavily reliant on market sentiments and the greater fool theory — the belief that it will always be possible to sell the asset for more than it was purchased for, as long as there is someone else willing to pay a higher price. This speculative approach treats assets not as sources of value but as mere tools for potential profit through trading. Such speculative assets include certain types of collectibles with no productive use, cryptocurrencies without widespread adoption as a medium of exchange or store of value, or financial instruments that derive their value solely from the betting on the price movements of other securities.

Speculation in such assets resembles a ticking time bomb, as it is sustained purely by confidence or hope. Once the collective belief in the asset's continued appreciation evaporates, or a market shock triggers a reassessment of the asset's value, the speculative bubble can burst. This leads to rapid devaluation, as the asset does not generate any real utility or income that could justify its elevated prices. Essentially, gains in such scenarios are merely the transfer of money from one participant to another, rather than the creation of new wealth through productive means.

Ultimately, enduring wealth is built on assets that contribute genuine value—either through productive use or through the income they generate. Assets lacking this inherent utility are vulnerable over the long term and can expose investors to significant risks once market sentiments shift. This perspective is crucial for both individual wealth planning and for the stability of the broader financial system.

The Case for Real World Assets

Stability in Tangibility

Real world assets, by their very nature, are inherently stable. Tokenized properties, infrastructure, and natural resources are essential for human activity, creating a baseline demand that is largely immune to technological obsolescence or market whims. Real estate markets, for instance, may fluctuate but the physical properties continue to serve a practical purpose, ensuring that their value does not plummet to zero. Digital assets that are tokenized forms of these real assets are also anchored in tangibility, thereby providing stability.

Intrinsic Value and Utility

The core of any real world asset lies in its utility. A commercial building generates rental income; agricultural land produces crops; solar farms generate renewable energy. This intrinsic utility means that real world assets do not just derive their value from speculative future gains but from real, quantifiable services they provide today. This aspect not only ensures a continuous return on investment through income like rent, dividends, or sales but also a resilience that speculative assets simply cannot match. Digital assets that tokenize such assets capture intrinsic value and utility. The value and price of that digital asset is based on real world fundamentals, unlike cryptocurrencies that have no such anchoring and are merely riding the wave of human emotion.

Hedge Against Inflation

Real world assets are excellent hedges against inflation. As prices rise, the value and income from tangible assets like real estate and commodities typically increase as well. This characteristic is especially crucial in times of economic uncertainty, where inflation can erode the value of purely financial assets. Real assets provide a tangible counterbalance that can protect and grow capital even during inflationary periods.

Sustainability and Social Impact

Investing in real world assets also aligns with broader environmental and social governance criteria, which are becoming increasingly important to global investors. Projects like renewable energy plants contribute to sustainable development, while investment in residential and commercial real estate developments can rejuvenate communities and create jobs. Fasset’s focus on tokenized real world assets allows investors to contribute to these positive outcomes, aligning financial goals with societal benefits.

The Bottom Line

In conclusion, Fasset’s decision to concentrate solely on real world assets is not just a strategic investment choice but a commitment to sustainable, value-driven growth. In an era where the digital and speculative often overshadow the tangible and practical, Fasset reaffirms the importance of assets that serve a real purpose and generate real returns. The stability, intrinsic value, and positive societal impact of real world assets make them a cornerstone for any serious investment portfolio.

Moreover, the focus on digital tokenized assets is more than just a business model; it is a reflection of a broader philosophy that values sustainability and resilience over quick gains and speculation. Investors looking to build lasting wealth would do well to consider the virtues of real world assets that not only preserve but enhance their capital in terms of real economic value and contribution to global well-being.

Fasset’s approach offers a clear path forward for those who seek not just to grow their wealth but to ensure it is rooted in assets that will stand the test of time and provide ongoing benefits to our communities and the world at large. In doing so, Fasset not only leads by example but also charts a course toward a more stable and sustainable future in investing.

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