Scaling asset tokenisation and DLT in finance

The financial industry is undergoing rapid transformation as asset tokenisation and distributed ledger technology (DLT) gain prominence for improving efficiency and accessibility in global markets. These innovations are bridging the divide between traditional and digital finance, driving new opportunities while overcoming challenges like scalability and regulatory alignment.

Bitcoin’s historic surge to $100,000 on 4 December 2024, has captured global attention, reaffirming the growing acceptance of digital assets as part of the mainstream financial ecosystem. This milestone coincides with broader innovations in tokenisation and DLT, highlighting their transformative potential. Notably, political developments in the United States (US) have played a pivotal role, with incoming President Donald Trump’s administration creating a crypto-friendly regulatory environment. The nomination of crypto advocate Paul Atkins as the new head of the Securities and Exchange Commission (SEC) underscores this shift, positioning the US as a key player in the global digital finance landscape

Globally, the jurisdictions in places such as Hong Kong, Malta, Singapore, Switzerland and the United Arab Emirates (UAE) are taking on active roles in driving collaboration in the fintech and digital asset space through specific initiatives like the Global Finance and Technology Network (GFTN), a non-profit founded by the Monetary Authority of Singapore (MAS). Ravi Menon, former MAS managing director and now GFTN chairman, described this evolution as “the next phase of Singapore’s fintech journey,” leveraging financial technology to create meaningful economic and social impact.

Ravi Menon, Chairman, Global Finance Technology Network

Companies like Digital Asset are already translating this vision into action. Yuval Rooz, co-founder and CEO of Digital Asset, emphasised the tangible benefits of tokenisation, stating, “Tokenisation is no longer a concept but a practical tool transforming the industry.”

Yuval Rooz, Co-founder and CEO, Digital Asset

While StraitsX, a Singapore-based issuer of digital assets like stablecoins, seeks to integrate blockchain into everyday transactions, Liu Tianwei, its CEO, explained that “blockchain and stablecoins have become integral back-end innovations, powering payments in ways that feel seamless to consumers.” Together, these technologies are laying the groundwork for a more inclusive and resilient financial ecosystem.

Liu Tianwei,CEO, StraitsX

The case for tokenisation

Asset tokenisation is reshaping the financial landscape by converting real-world assets into digital tokens that can be traded on blockchain platforms. By enabling fractional ownership, enhancing liquidity, and reducing costs, tokenisation is transforming traditionally inaccessible markets like real estate, bonds, and structured financial products. This innovation addresses inefficiencies and opens new opportunities for institutions and individual investors alike.

In October 2024, Euroclear acquired a strategic stake in Marketnode, a Singapore-based digital market infrastructure operator specialising in DLT platforms for tokenisation and blockchain-based fund processing, with other investors such Temasek, Singapore’s national investment company, and HSBC. Rehan Ahmed, CEO of Marketnode, highlighted the importance of cross-border tokenisation. “Euroclear’s infrastructure enables Asian fund managers to reach new markets, bridging the gap between traditional and digital finance.”

The interoperability that platforms like Marketnode provide is critical for scaling tokenisation across global markets. By connecting institutional players to more efficient blockchain-based networks, the platform reduces friction in cross-border investments, enhancing market access and operational efficiency.

Cardano, a decentralised, open-source blockchain platform that utilises a proof-of-stake consensus mechanism to facilitate peer-to-peer transactions with its native cryptocurrency, ADA, is also driving tokenisation. Known for its focus on security, scalability and sustainability, Cardano provides programmable assets tailored to institutional and retail markets.

Nikhil Joshi, COO of EMURGO, the commercial arm of Cardano, explained, “Institutions are increasingly drawn to digital assets as tools for settlement efficiency, liquidity, and fractional ownership.” He elaborated that tokenisation in real estate, a sector often plagued by high transaction costs and long settlement times, allows smaller investors to participate through fractional ownership, which unlocks previously untapped liquidity.

Compliance and trust are essential for ensuring widespread adoption of tokenisation, particularly among regulators and merchants. Kenny Chan, head of StraitsX explained, “Our embedded compliance checks give regulators and merchants confidence in the security of tokenised payments.” With the proliferation of tokenised solutions in payments, StraitsX ensures transparency and security in its operations, providing a foundation of trust that is essential for institutional adoption.

Efficiency gains are a cornerstone of tokenisation’s appeal. Rooz emphasised the transformative impact of streamlining settlement processes. “When clients see their processes streamlined, the business case for tokenisation becomes undeniable.” He explained that automation within blockchain systems can reduce settlement times from weeks to minutes, cutting costs and eliminating the need for intermediaries. Digital Asset’s Canton Network further exemplifies these benefits by providing a privacy-enabled blockchain that synchronises assets and data in real time across multiple applications, maintaining security and operational trust without sacrificing control.

JP Morgan’s Kinexys, formerly known as Onyx, represents another leap forward in asset tokenisation. The platform focuses on reimagining the movement of money, assets and financial information. With over $1.5 trillion in transaction volume processed since its inception, Kinexys has demonstrated the commercial viability of blockchain in financial operations.

New York-based Paxos, a regulated blockchain infrastructure platform that provides services such as stablecoins, cryptocurrency brokerage, and securities settlement, recently launched the Global Dollar Network (GDN) through its Singapore subsidiary, Paxos Singapore. The US dollar-backed stablecoin platform is designed to meet MAS’s upcoming stablecoin framework. The GDN allows financial institutions to issue the Global Dollar (USDG) while remaining fully-compliant with local regulations. This initiative aims to accelerate the adoption of stablecoins, particularly in cross-border payments, where speed and cost-efficiency are paramount.

Globally, tokenisation is gaining traction across various sectors. According to a 2023 report by the World Economic Forum, tokenised markets could reach $24 trillion by 2027. This growth is driven by advancements in blockchain technology and an increasing institutional appetite for digital assets. Platforms like Marketnode, ecosystems like Cardano and solutions such as Canton, Kinexys, and GDN are paving the way for tokenisation to become a cornerstone of the financial industry.

Through Project Guardian, MAS has convened over 40 financial institutions, industry associations, and policymakers across seven jurisdictions to conduct trials on asset tokenisation in capital markets. To date, these trials have explored six currencies across multiple financial products, demonstrating tokenisation’s viability and scalability. These efforts reflect MAS’s commitment to fostering an ecosystem that supports capital raising, secondary trading and settlement efficiencies.

Additionally, tokenisation aligns with environmental, social and governance (ESG) priorities by facilitating the issuance and fractionalisation of green bonds. These bonds support projects in renewable energy, carbon offsetting, and sustainable infrastructure. Ahmed noted that tokenisation enhances transparency in ESG reporting, making it easier for investors to track the impact of their investments. By broadening access to sustainable initiatives, tokenisation not only promotes inclusivity but also strengthens the link between financial innovation and social impact.

Overcoming challenges in scaling DLT

While the promise of asset tokenisation and DLT is clear, achieving scalability requires overcoming several critical challenges. Issues such as regulatory uncertainty, technical limitations and interoperability are at the forefront, demanding collaborative solutions from industry stakeholders.

Regulatory frameworks remain a major barrier. Menon emphasised the role of governance: “Governance frameworks are critical to ensuring privacy, accountability, and explainability of systems like artificial intelligence (AI) and blockchain”.

Interoperability remains a key challenge for scaling DLT. The MAS’s Global Layer One (GL1) initiative exemplifies efforts to create foundational infrastructures enabling seamless cross-border transactions. Since its 2023 launch, GL1 has brought together global banks such as BNY, Citi, and JP Morgan to align governance, risk, and technology requirements for cross-border tokenised asset transactions. By defining specifications and developing compliance-by-design templates, GL1 accelerates onboarding for new participants while ensuring interoperability between diverse systems.

MAS’s inclusion of Euroclear and HSBC in GL1 further reinforces the initiative’s global scope. These efforts are complemented by a new market infrastructure working group focusing on digital asset securities control principles.

Harmonised regulations build trust across jurisdictions, enabling broader adoption of blockchain technologies. For example, the Markets in Crypto-Assets Regulation (MiCA), a European Union framework, establishes clear rules for issuers and service providers. Hong Kong Monetary Authority (HKMA)’s digital asset policy framework, the “Policy Statement on the Development of Virtual Assets in Hong Kong” outlines its vision and approach to fostering a vibrant virtual asset (VA) sector. Similarly, the Abu Dhabi Global Market (ADGM) in the United Arab Emirates (UAE) has developed a comprehensive digital asset regulatory framework to support the issuance and trading of tokenised assets while ensuring investor protection.

The US government’s recent pivot towards more crypto-friendly policies, including plans for a national bitcoin reserve, may catalyse institutional adoption. Alongside the approval of multiple spot bitcoin exchange-traded funds (ETFs), these measures are bridging the gap between traditional and digital finance. This policy environment not only bolsters bitcoin but also aligns with advancements in asset tokenisation and DLT, making the US, belatedly, a significant player in scaling these technologies globally.

Legal complexities could complicate tokenisation efforts. Aaron Gwak, founder and CEO of Libeara, a Singapore-based tokenisation platform incubated by Standard Chartered’s SC Ventures, pointed out, “Tokenisation is simple, but doing it with a full legal framework is challenging”. Ensuring compliance from the outset is critical for aligning digital assets with local laws and investor protections. Frameworks like ADGM’s regulatory guidelines serve as benchmarks for integrating legal clarity into digital asset issuance, paving the way for greater adoption.

On the technical front, interoperability between blockchain networks is essential for scaling tokenisation. Toh Wee Kee, global head of business architecture of Kinexys Digital Payments at JP Morgan, remarked, “Private networks like GL1 address institutional concerns around governance while maintaining interoperability.” These networks enable financial institutions to operate securely within their regulatory and privacy constraints while interacting seamlessly with external systems. DLT platforms are also tackling the challenge of balancing privacy with transparency. Rooz highlighted how the Canton Network achieves this balance. “When institutions demand real-time synchronisation, privacy is critical, ensuring operational trust without sacrificing control to intermediaries.” This approach empowers institutions to adopt blockchain solutions confidently, knowing sensitive data is protected.

Stablecoins play a crucial role in scaling tokenisation by addressing cross-border payment inefficiencies. Ronak Daya, head of product at Paxos, explained, “Stablecoins thrive when operating within clear, trusted regulatory frameworks, which helps scale adoption effectively.” Paxos’ GDN showcases how a stablecoin can align with MAS regulations while providing cost-effective solutions for global transactions. By meeting stringent regulatory requirements, the USDG stablecoin aims to set new standards for stability and compliance.

Ronak Daya, Head of Product, Paxos

Scalability also relies on trust embedded in payment infrastructure. Chan remarked, “Scalability in payments requires a foundation of trust, and stablecoins provide this bridge.” StraitsX integrates blockchain with compliance at every stage, ensuring transactions are secure and efficient. This dual focus on scalability and security has made StraitsX a trusted partner in the tokenised payments ecosystem.

Finally, scalability must account for the human element. Training and upskilling employees to work with blockchain technology is critical for widespread adoption. Organisations like the GFTN and educational initiatives from leading platforms are addressing the skills gap, fostering the next generation of blockchain-ready professionals.

Institutional adoption and use cases

The adoption of tokenisation and DLT by financial institutions is accelerating, with real-world use cases proving the value of these innovations. Banks, asset managers and fintech firms are implementing tokenised solutions to drive efficiency, unlock new opportunities, and meet evolving client demands.

Kinexys demonstrates the power of tokenisation at scale. Toh highlighted its success, saying, “Daily transaction volumes exceeding $2 billion prove the commercial viability of tokenised payment systems.” Kinexys has redefined how assets move across borders, enabling instant settlements and reducing the friction traditionally associated with cross-border payments. By integrating private blockchain networks with institutional systems, Kinexys offers a model for how large-scale operations can adopt DLT without compromising regulatory requirements.

Another significant player is Sygnum Bank, the world’s supposed first digital asset bank fully licensed by Swiss regulators. Mathias Imbach, co-founder and group CEO of Sygnum Bank, explained, “Institutional adoption is building momentum as regulatory frameworks mature and trust is rebuilt.” Sygnum’s tokenisation of real-world assets, including fine art and real estate, showcases the potential to expand investment access while maintaining compliance. This approach bridges the gap between traditional finance and digital innovation, offering secure and regulated pathways for institutions to explore tokenised markets.

Canton Network represents a privacy-enabled blockchain network that ensures secure, real-time synchronisation across applications. It enables financial institutions to interact seamlessly across different ecosystems, addressing one of the key barriers to widespread adoption—interoperability.

Stablecoins, too, play a pivotal role in institutional adoption of tokenisation. Chan remarked, “Stablecoins provide the foundation of trust needed for scalable payment solutions.” StraitsX is leveraging blockchain to simplify cross-border payments for businesses while embedding compliance into every transaction. By building trust at the infrastructure level, StraitsX has positioned itself as a reliable partner for institutions navigating the complexities of tokenised payments.

Beyond payments, tokenisation is making waves in the securities market. Ahmed highlighted Marketnode’s role in transforming structured financial products, bridging the gap between traditional and digital finance. Marketnode’s ability to tokenise bonds and other complex instruments will facilitate enhanced liquidity and accessibility, providing new opportunities for both issuers and investors.

MAS is actively commercialising tokenisation trials through initiatives such as the Guardian Wholesale Network (GWN), comprising Citi, HSBC, Schroders, Standard Chartered and UOB. These institutions are scaling the outcomes of industry trials conducted under Project Guardian, connecting products and services across multiple currencies and assets. This approach aims to deepen liquidity in primary and secondary markets, enabling scalable capital raising, asset servicing, and settlement for tokenised assets.

Building trust and regulatory alignment

Institutions adopting these technologies must address concerns around transparency, security, and legal alignment to foster confidence among investors, regulators and market participants.

Daya stressed the role of compliance in building trust: “Stablecoins thrive when operating within clear, trusted regulatory frameworks, which helps scale adoption effectively”. Paxos exemplifies this through GDN’s adherence to regulatory standards for stablecoins to ensure stability while promoting cross-border adoption.

Chan explained how StraitsX embeds compliance at every stage: “Our embedded compliance checks give regulators and merchants confidence in the security of tokenised payments”. By integrating robust safeguards, it not only meets regulatory expectations but also reinforces trust among its institutional and retail partners.

Privacy concerns are another major consideration. Rooz highlighted the Canton Network’s approach to safeguarding data while maintaining operational efficiency. Its architecture allows for secure, privacy-preserving interactions across multiple networks, making it a trusted platform for financial institutions.

Globally, regulatory frameworks such as MiCA, ADGM, HKMA and MAS’s digital asset guidelines seek to set the standards for alignment and accountability. These frameworks offer clarity to institutions, enabling them to navigate the complexities of digital asset compliance. Menon called for more collaboration in creating unified regulations: “Governance frameworks are critical to ensuring privacy, accountability and explainability of systems like AI and blockchain”. Unified regulations foster trust and open pathways for cross-border collaboration.

While the US looks to lead in crypto-friendly regulatory advancements, global initiatives like MAS GL1 project and the EU’s MiCA framework underscore the importance of harmonised governance. These initiatives collectively address key challenges, such as regulatory interoperability and scalability, ensuring that innovations like bitcoin and tokenisation ecosystems can thrive across borders.

MAS has championed this through the publication of two industry frameworks under Project Guardian: the Guardian Fixed Income Framework (GFIF) and the Guardian Funds Framework (GFF). GFIF integrates international standards for tokenised securities in debt capital markets, while GFF provides guidelines for developing tokenised investment vehicles comprising multiple assets. These frameworks catalyse adoption by simplifying fund settlement processes and strengthening industry capabilities.

Future outlook and strategic vision

The future of tokenisation and DLT lies in the seamless integration of traditional and digital finance. Institutions must continue innovating while addressing key challenges like scalability, interoperability and regulatory alignment. At the same time, advancements in complementary technologies such as AI and quantum computing promise to redefine the boundaries of what these systems can achieve.

Rooz shared his vision for the next wave of blockchain-driven transformation: “Combining blockchain with AI and quantum computing could supercharge digital finance”. This convergence could lead to unprecedented efficiency and security in processes like settlement, risk management, and asset servicing. Canton Network, with its focus on privacy and real-time synchronisation, exemplifies how foundational blockchain infrastructure can adapt to incorporate emerging technologies.

Institutions like Sygnum Bank are also preparing for the future by embracing tokenisation in previously untapped sectors. With tokenisation extending into sectors like fine art and real estate, financial institutions are poised to unlock new markets and revenue streams while offering clients enhanced investment options.

The continued push for interoperability will shape tokenisation’s trajectory. Toh highlighted Kinexys’ contributions to creating a more connected ecosystem. Such systems ensure that institutions can adopt blockchain solutions without compromising on security, privacy or regulatory requirements, laying the groundwork for a unified global financial infrastructure.

Lead the future of finance with tokenisation

The transformation of finance through tokenisation and DLT is no longer a distant vision but a rapidly unfolding reality. From reducing inefficiencies in settlement processes to enabling broader participation in sustainable investments, tokenisation is starting to reshape traditional financial systems. However, the journey towards full-scale adoption depends on addressing critical challenges, including regulatory alignment, interoperability and scalability. 

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