February 2025
Tokenization refers to the process of representing an asset as a digital record or token on a common programmable platform using distributed ledger technology (DLT) or similar technology, according to the Financial Stability Board (FSB, 2023) and the Bank for International Settlements (Iñaki Aldasoro, 2023). Asset tokenization has emerged as a transformative force in the financial industry, fundamentally reshaping how assets are structured, owned, and exchanged.
By converting real-world assets—such as real estate, stocks, and fixed income—into digital tokens on a blockchain, tokenization provides unprecedented efficiency, transparency, and accessibility. It enables fractional ownership, allowing investors to participate in markets that were traditionally restricted to high capital barriers. This approach has opened opportunities for broader investor participation and has increased liquidity across markets. Furthermore, tokenization leverages smart contracts to streamline processes, reduce the need for intermediaries, and enhance security, ultimately driving down costs and enabling seamless transactions across digital platforms.
Key discussions from the Singapore FinTech Festival (SFF) 2024 emphasise the importance of commercial viability alongside technological advancements, with initiatives like Project Guardian showcasing successful pilot programs across various asset classes. The findings indicate that while challenges remain, particularly regarding regulatory frameworks and industry collaboration, the industry is starting to move to commercialisation and realising the potential benefits of asset tokenization, including lower costs, higher liquidity, and improved transaction security.
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