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Growing expectations
21 Jan 2026
Olivier Carré, technology and transformation leader at PwC Luxembourg, looks at the hype surrounding tokenisation, and asks, could it really unlock US$135 billion in cost savings for asset managers?
Image: PwC Luxembourg
Tokenisation has emerged again recently as one of the most discussed innovations in asset management, and private markets in particular, attracting as much scrutiny as excitement.
With tokenised investment funds AuM projected to grow at 41 per cent compound annual growth rate (CAGR) to US$715 billion by 2030 according to PwC’s latest Asset and Wealth Management Revolution report, the industry faces an inflection point.
Advocates promise efficiency, transparency, and wider access. Critics warn of liquidity illusions, regulatory uncertainty and investor confusion.
For all the hype, the central question remains: can it deliver real value, or is it merely another wrapper in search of a use case?
The promise of tokenisation
At its core, tokenisation involves converting fund units into blockchain-based tokens, enabling digital ownership and transfer. The investment strategy and risk profile of the underlying investments remain unchanged. What is transformed is the way investors access, trade and transfer those assets.
Momentum has rapidly accelerated, with real-world asset (RWA) tokenisation estimated to have surpassed US$24 billion in June 2025, up from about US$14. 2 billion at the end of 2024.
From tokenised money market funds (MMFs) to blockchain-based feeder structures, adoption is gathering pace.
Amid the excitement, compliance and business purpose are essential, and these must remain front and centre.
An investors’ business case: Efficiency, access and transparency
The appeal of tokenisation rests on three pillars.
On efficiency, the operational benefits of tokenisation are compelling, with research by Calastone suggesting that tokenised fund structures could reduce the operating costs of asset managers by up to 23 per cent, unlocking an estimated US$135 billion in global savings. Automated compliance, faster settlement and reduced reliance on intermediaries all contribute to the gain.
On access, fractional ownership lowers entry thresholds.
This is particularly attractive to retail and mass-affluent investors who have historically been excluded from private markets.
Recent research by PwC found that 53 per cent of asset and wealth managers report growing retail demand for private markets exposure, driven by growing interest in tokenised assets such as private equity and infrastructure.
On transparency, blockchain creates an immutable record of ownership and transfer. For investors, this can improve auditability and enhance confidence in a sector often criticised for opacity and complexity.
The illusion of liquidity
Despite its promise, tokenisation is not without pitfalls.
Tokenised funds are often promoted as enabling 24/7 tradability, but without regulated platforms and committed market makers, activity remains thin.
The result is an illusion of liquidity, where investors may be able to list assets for sale but find no buyers on the other side.
Regulators have taken notice, with the European Securities and Markets Authority (ESMA) warning that tokenised securities may leave retail investors confused about their actual rights and protections. Lower entry thresholds may widen participation, but they do not reduce the underlying risks, and mis-selling remains a serious concern.
Another challenge lies in perception. Tokenisation reimagines delivery, but it does not alter fundamentals.
The underlying investment remains the same, but the wrapper is new. Marketing tokenised products as inherently superior risks misleading investors on risk and reward. Operational resilience is also under scrutiny. Regulated providers, custody arrangements for digital wallets, cybersecurity protection and the robustness of distributed ledger infrastructure are all critical to confidence. Without credible safeguards, the very efficiencies tokenisation promises could be undermined by new vulnerabilities. The excitement around tokenisation must therefore be tempered with realism, as innovation without protection risks creating complexity rather than clarity.
Infrastructure first, hype later
For tokenisation to move from the experimental stage to the mainstream, infrastructure must come first and hype second. Reasonably regulated custody solutions, tiered suitability frameworks and regulated secondary platforms are all prerequisites for sustainable growth. A tiered access model offers one way forward. Retail investors could be offered tokenised versions of mainstream products such as Undertakings for Collective Investment in Transferable Securities (UCITS) and ETFs — diversified, liquid, and tightly regulated.
Mass-affluent investors might access tokenised feeder or interval funds, provided robust suitability checks are in place.
Institutional investors, with greater sophistication and risk tolerance, are best positioned to engage with fully tokenised private markets.
For asset managers, the benefits lie in operational efficiency and expanded distribution.
Tokenisation can reduce the friction of subscriptions, redemptions and transfers, while creating new channels to reach retail and mass-affluent investors.
But to succeed, it must evolve responsibly. It must enhance investor access without diluting protection and deliver efficiency gains without sacrificing resilience.
A solid framework and trust are the critical success factors
Tokenisation marks a structural evolution in private markets.
Its potential for cost savings and broader access is evident, but so are the risks of liquidity illusion, investor misunderstanding and regulatory misalignment.
The responsibility lies with asset custodians and managers to guide this transition.
If tokenisation is introduced gradually starting with mainstream regulated products and moving gradually towards alternatives, it can balance innovation with protection.
Ultimately, the success of tokenisation will hinge on its digital efficiency, and its ability to command investor trust.
Striking that balance could deliver long lasting benefits for both investors and the industry at large.
Encouragingly, progress is being made. Luxembourg has taken a leading position with successive blockchain laws, most recently ‘Blockchain Law IV’, which enables the issuance of fund shares on distributed ledger technology.
Singapore’s Monetary Authority (MAS) has also developed a comprehensive framework for digital assets, including tokenised funds.
So, the choice of an innovative domicile with access to a large number of potential investors in a harmonised manner is the next frontier for many innovative organisations embracing tokenisation.
With tokenised investment funds AuM projected to grow at 41 per cent compound annual growth rate (CAGR) to US$715 billion by 2030 according to PwC’s latest Asset and Wealth Management Revolution report, the industry faces an inflection point.
Advocates promise efficiency, transparency, and wider access. Critics warn of liquidity illusions, regulatory uncertainty and investor confusion.
For all the hype, the central question remains: can it deliver real value, or is it merely another wrapper in search of a use case?
The promise of tokenisation
At its core, tokenisation involves converting fund units into blockchain-based tokens, enabling digital ownership and transfer. The investment strategy and risk profile of the underlying investments remain unchanged. What is transformed is the way investors access, trade and transfer those assets.
Momentum has rapidly accelerated, with real-world asset (RWA) tokenisation estimated to have surpassed US$24 billion in June 2025, up from about US$14. 2 billion at the end of 2024.
From tokenised money market funds (MMFs) to blockchain-based feeder structures, adoption is gathering pace.
Amid the excitement, compliance and business purpose are essential, and these must remain front and centre.
An investors’ business case: Efficiency, access and transparency
The appeal of tokenisation rests on three pillars.
On efficiency, the operational benefits of tokenisation are compelling, with research by Calastone suggesting that tokenised fund structures could reduce the operating costs of asset managers by up to 23 per cent, unlocking an estimated US$135 billion in global savings. Automated compliance, faster settlement and reduced reliance on intermediaries all contribute to the gain.
On access, fractional ownership lowers entry thresholds.
This is particularly attractive to retail and mass-affluent investors who have historically been excluded from private markets.
Recent research by PwC found that 53 per cent of asset and wealth managers report growing retail demand for private markets exposure, driven by growing interest in tokenised assets such as private equity and infrastructure.
On transparency, blockchain creates an immutable record of ownership and transfer. For investors, this can improve auditability and enhance confidence in a sector often criticised for opacity and complexity.
The illusion of liquidity
Despite its promise, tokenisation is not without pitfalls.
Tokenised funds are often promoted as enabling 24/7 tradability, but without regulated platforms and committed market makers, activity remains thin.
The result is an illusion of liquidity, where investors may be able to list assets for sale but find no buyers on the other side.
Regulators have taken notice, with the European Securities and Markets Authority (ESMA) warning that tokenised securities may leave retail investors confused about their actual rights and protections. Lower entry thresholds may widen participation, but they do not reduce the underlying risks, and mis-selling remains a serious concern.
Another challenge lies in perception. Tokenisation reimagines delivery, but it does not alter fundamentals.
The underlying investment remains the same, but the wrapper is new. Marketing tokenised products as inherently superior risks misleading investors on risk and reward. Operational resilience is also under scrutiny. Regulated providers, custody arrangements for digital wallets, cybersecurity protection and the robustness of distributed ledger infrastructure are all critical to confidence. Without credible safeguards, the very efficiencies tokenisation promises could be undermined by new vulnerabilities. The excitement around tokenisation must therefore be tempered with realism, as innovation without protection risks creating complexity rather than clarity.
Infrastructure first, hype later
For tokenisation to move from the experimental stage to the mainstream, infrastructure must come first and hype second. Reasonably regulated custody solutions, tiered suitability frameworks and regulated secondary platforms are all prerequisites for sustainable growth. A tiered access model offers one way forward. Retail investors could be offered tokenised versions of mainstream products such as Undertakings for Collective Investment in Transferable Securities (UCITS) and ETFs — diversified, liquid, and tightly regulated.
Mass-affluent investors might access tokenised feeder or interval funds, provided robust suitability checks are in place.
Institutional investors, with greater sophistication and risk tolerance, are best positioned to engage with fully tokenised private markets.
For asset managers, the benefits lie in operational efficiency and expanded distribution.
Tokenisation can reduce the friction of subscriptions, redemptions and transfers, while creating new channels to reach retail and mass-affluent investors.
But to succeed, it must evolve responsibly. It must enhance investor access without diluting protection and deliver efficiency gains without sacrificing resilience.
A solid framework and trust are the critical success factors
Tokenisation marks a structural evolution in private markets.
Its potential for cost savings and broader access is evident, but so are the risks of liquidity illusion, investor misunderstanding and regulatory misalignment.
The responsibility lies with asset custodians and managers to guide this transition.
If tokenisation is introduced gradually starting with mainstream regulated products and moving gradually towards alternatives, it can balance innovation with protection.
Ultimately, the success of tokenisation will hinge on its digital efficiency, and its ability to command investor trust.
Striking that balance could deliver long lasting benefits for both investors and the industry at large.
Encouragingly, progress is being made. Luxembourg has taken a leading position with successive blockchain laws, most recently ‘Blockchain Law IV’, which enables the issuance of fund shares on distributed ledger technology.
Singapore’s Monetary Authority (MAS) has also developed a comprehensive framework for digital assets, including tokenised funds.
So, the choice of an innovative domicile with access to a large number of potential investors in a harmonised manner is the next frontier for many innovative organisations embracing tokenisation.
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