While the financial industry has always been a dynamic one, there is no doubt that the next few years will see it undergo one of the biggest—yet quietest—revolutions in living memory.
Indeed, the transformation of securities into digital assets and tokens is going to completely change the way investors operate, interact with the market, and make decisions.
Yet, as I have seen over my decades of experience in this industry, this is not something to be scared of, but rather a process that will reshape and democratise traditional finance by making it more accessible, efficient, transparent, and fast.
Here’s why.
Let’s start from the basics, shall we?
For decades, financial instruments like bonds, equities, and real estate have involved a lot of manual processes. Those who, like me, have run such processes can appreciate just how slow settlements can be, how cumbersome reconciliation is, and how limited smaller players have been.
Today, however, the Blockchain and smart contracts are allowing these same assets to be tokenised; a process through which they become represented digitally on a decentralised ledger.
These still hold the same legal and economic value as their traditional counterparts, but now they come with reduced paperwork, quicker transaction speeds, and better ability for automation.
Moving on to tokenisation, this is also boosting operational efficiency, and is doing so in two very specific ways.
This change will be especially valuable in markets where settlement typically takes days, such as bond trading or cross-border transactions.
Plus, the use of smart contracts in such transactions means that rules—be they for dividend payments or regulatory checks—will be automatically enforced.
Another advantage of tokenisation is that it is opening investment opportunities to a wider audience.
As many will remember, investing in things like private equity or real estate traditionally required large sums and long lock-up periods.
Now, however, assets can be broken into smaller digital units, eventually enabling broader participation even from individual investors or SMEs.
This fractional ownership will also enhance liquidity in historically illiquid markets... After all, a tokenised building can be traded on a secondary market much like shares on a stock exchange, offering investors new avenues for diversification.
These past 10 years have truly changed the face of investment, but things are still progressing.
Now, banks, asset managers, and infrastructure providers are testing tokenised versions of traditional assets, investment by major players is increasing, and even central banks are exploring the possibilities of digital currencies (CBDCs), which could integrate with tokenised systems to create seamless digital cash.
At the same time, digital-native firms are developing tokenised investment platforms, digital custody services, and automated compliance tools, building a new layer of financial infrastructure.
Yet, despite the potential, there are still pitfalls we should all be aware of, and none are more crucial than the fact that as digital assets blur the lines between securities, commodities, and currencies, better legal frameworks are required to ensure players and their assets are protected.
Thankfully, regulations like the EU’s MiCA are starting to support tokenised finance, which is a crucial step for building trust, enabling sustainable growth, and securing their future.
In fact, you can rest assured that tokenisation isn’t just a trend, but a structural shift in how value is created and exchanged. For forward-thinking firms, this is also a chance not just to adapt, but to lead.