Tokenisation has been promised for years. What has actually changed that makes this moment different?
The fundamental difference is infrastructure maturity. We’re no longer talking about theoretical benefits or isolated pilot projects. Major market infrastructure providers — DTCC, NYSE, and ICE — are actively building tokenised rails that are fungible with traditionally issued securities. Banks are launching tokenised deposit capabilities.
BlackRock, Franklin Templeton, BNY, and J.P. Morgan have all tokenised their money market funds.
When you see this calibre of institutional participant committing operational resources and balance sheet, the conversation shifts from ‘if’ to ‘when’ and ‘how’. The rails are being laid right now.
Asset managers who position themselves on these rails early will define competitive advantage for the next decade.
You mentioned tokenised money market funds specifically. Why are they proving to be the breakthrough use case?
Because they solve an immediate, high-value problem: liquidity efficiency. Cash is no longer king in a world moving to T+0 settlement. Traditional money market sweep accounts were designed for T+1 settlement cycles. They work, but they’re not optimal when markets operate continuously.
Natively tokenised money market funds (tMMFs) provide 24/7 trading with no cut-off times, no time zone constraints, atomic delivery versus payment, and intraday access to cash. This allows liquidity to flow optimally. For institutional treasury management, this is transformative — not theoretical.
Currently, tMMFs represent about US$9 billion from a US$10 trillion global money market fund universe. That’s small in percentage terms but growing rapidly.
The economic case is proven. Institutional investors are beginning to exploit tMMFs precisely because the benefit is measurable: improved collateral velocity, automated margin processes via smart contracts, and reduced settlement risk.
You argue private markets could benefit even more from tokenisation than public markets. Walk me through that logic.
Private markets — private equity, real estate, infrastructure, and private credit — suffer from structural friction: illiquid trading, high transaction costs, restricted investor bases, lengthy fund launches, and complex documentation specific to each investment.
Tokenisation, combined with AI, can fundamentally change this. AI, through large and small language models and agentic frameworks, can now identify, define, and aggregate data from vast universes of investment documents to provide the metadata needed to tokenise assets. As managers digitise these cumbersome, unique documents, standardisation will accelerate — driven by the commercial value of launching funds more quickly to broader primary and active secondary markets onchain.
The distribution opportunity is massive. Average global allocations to private markets have reached 12.5 per cent, but institutions are refining positions rather than increasing them. Liquidity premiums are under scrutiny. These trends point to a need for new investor classes and vehicles. Tokenisation enables fractional investment models, lower minimum entry requirements, and access to accredited investors through digital platforms.
For private markets, tokenisation isn’t an incremental improvement — it’s potentially leap-frogging the current restrictive environment to reach broader investor bases with genuinely improved liquidity characteristics.
How would you describe the regulatory landscape?
Regulation is advancing, though at different speeds across jurisdictions.
What’s changed is regulatory clarity rather than wholesale liberalisation.
Abu Dhabi has led with comprehensive frameworks since 2018, reflecting how sovereign wealth funds want to access investments and reduce costs. The EU is establishing industry standards through MiCA.
The US is creating favourable conditions with the GENIUS Act and Clarity Act. The UK is catching up, now supporting fund investment in tokenised assets and the use of tMMFs as collateral.
No-action letters, published FAQs, and emerging legislation are giving institutional players the confidence to bring meaningful products onchain. It’s not uniform globally, but the direction is clear: all regulatory roads are leading toward supporting the digitalisation of global markets. Competition between regions to capture future digital financial market share is becoming visible.
You talk about wallet-native distribution. What does that actually mean for traditional asset managers?
The next generation of wealth holders expects to manage financial lives through digital wallets, not traditional brokerage accounts. A wallet-native distribution model enables instant subscription and redemption, 24/7 access to global tokenised assets, and consolidated holdings — crypto, cash, ETFs, private assets — all within the same interface.
This isn’t hypothetical. Investors increasingly want exposure to a full ecosystem of assets. Tokenisation makes this possible and brings traditional and decentralised finance closer together.
For asset managers, this represents both opportunity and threat. The opportunity: expand distribution channels, reach new investor segments, modernise operating models. The threat: if you’re not accessible through these emerging channels, you risk becoming invisible to the next generation of allocators.
People ask ‘What’s the risk of waiting? Being a fast follower has worked in the past’.
That’s the critical misjudgment I’m seeing. The old playbook of let others make mistakes, then move fast, doesn’t apply here. Here’s why:
Infrastructure is being built now. Once DTCC, NYSE, and ICE have established tokenised rails and institutional participants have migrated workflows, retrofitting becomes exponentially harder. You’re not just adopting technology — you’re rebuilding operational foundations while competitors are already servicing clients efficiently.
Distribution channels are forming. Digital platforms and wallet-native interfaces are capturing investor relationships. Once investors consolidate holdings in these environments, migrating them back to traditional channels becomes nearly impossible.
Investor expectations are shifting. Speed, access, and integration standards are being set by early movers. Clients who experience 24/7 liquidity and atomic settlement won’t accept T+1 settlement and business-day constraints.
The balance of risk has fundamentally reversed. Historically, moving too early on unproven technology was riskier than waiting. Today, with infrastructure maturing and regulation clarifying, not engaging is the higher risk. You’re not protecting downside — you’re ceding competitive position.
What should asset managers actually do right now?
There are three things I would recommend in priority order:
First, run focused projects with clear goals. Don’t attempt wholesale transformation. Target specific problems: tokenised money market funds for capital efficiency, private asset issuance to broaden distribution, and collateral structures to improve liquidity management. Each addresses a concrete business case. These projects also build internal understanding without overcommitting to a single model.
Second, strengthen data and control foundations. Tokenisation places enormous pressure on data quality and governance.
Accurate asset data, clear ownership structures, robust reconciliation, and well-defined identity frameworks become critical when assets move across different rails. Know Your Customer (KYC) and anti-money laundering (AML) robustness is essential to ensure only legitimate users access the ecosystem — this builds trust at scale.
Importantly, many firms are already investing in data architecture to support AI, improve reporting, and enhance operational resilience. These same capabilities underpin tokenisation readiness. There’s significant overlap with existing priorities.
Third, engage with the ecosystem. Don’t just observe from the sidelines. Participate in industry working groups, test interoperability with infrastructure providers, and understand how custody models are evolving. The industry remains in transition — interoperability is developing, regulatory alignment is incomplete, and many operating models will remain hybrid. But firms need sufficient understanding to respond with intent.
You mentioned interoperability. Why does that matter?
Because fragmentation defeats the purpose. If every platform operates on incompatible rails with different standards, we simply recreate the fragmentation problems we have today — except now with added technological complexity.
Genuine interoperability — across chains, across custody models, across jurisdictions — is what unlocks the network effects that make tokenisation transformative.
It’s what allows a tokenised asset issued in one jurisdiction to serve as collateral in another, settled atomically against tokenised deposits, with full regulatory compliance and audit trails.
This is why engagement with infrastructure providers matters. The standards being established now will determine whether we get an interoperable ecosystem or a fragmented mess.
Asset managers have a voice in this process, but only if they’re at the table.
What about costs? Tokenisation sounds expensive to implement.
It depends entirely on the approach. If you try to build proprietary infrastructure from scratch, then yes, it’s prohibitively expensive and strategically questionable.
But the infrastructure-as-a-service model is emerging rapidly. You can access tokenisation capabilities through custodians, fund administrators, and platform providers who are building multi-client infrastructure.
The marginal cost of participation becomes manageable, particularly when weighed against the efficiency gains and distribution opportunities.
Think about the cost equation holistically. Tokenisation reduces settlement costs, eliminates reconciliation failures, automates collateral management through smart contracts, and enables 24/7 liquidity without staffing night shifts. The operational savings can be substantial.
More importantly, consider opportunity cost. What’s the revenue impact of not being accessible to investors who increasingly expect digital, always-on access?
What’s the competitive cost of slower settlement when rivals are offering atomic delivery-versus-payment (DvP)? These costs compound rapidly.
What would you say to asset managers still sceptical about tokenisation?
I understand scepticism. The industry has weathered plenty of overhyped technologies that failed to deliver. But tokenisation is fundamentally different because it’s infrastructure-level change, not application-layer innovation.
The conversation at Davies has shifted decisively. Twelve months ago, we were explaining what tokenisation is.
Today, clients ask how to implement specific use cases and when to move. That’s a qualitative change.
My message: you don’t need to transform overnight, but you do need to build understanding and capability now.
Run targeted pilots. Strengthen your data foundations.
Engage with infrastructure providers. Monitor regulatory developments in key markets.
Agility is essential to remaining competitive. The industry is in transition — interoperability is developing, regulatory alignment is incomplete, operating models will remain hybrid.
But in a multi-rail environment, firms need sufficient understanding to respond with intent.
Those who wait for perfect clarity will find the market has already moved. Tokenisation is becoming the default infrastructure for how money and assets move. Asset managers must prepare for a world where investors expect real-time, wallet-based access.
This isn’t about chasing hype. It’s about recognising structural change and positioning accordingly. At Davies, we’re seeing this across the market. The question is no longer whether tokenisation matters — it’s whether you’re ready.
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