The financial industry is undergoing a quiet revolution. As traditional systems begin to intersect more meaningfully with blockchain technology, one concept is rapidly gaining traction: tokenisation. By turning real-world assets into digital tokens using blockchain technology, tokenisation is opening new doors for how value is created, transferred and managed. Recent developments suggest that we are not simply approaching a tipping point; we may already be in the midst of it as institutions around the world position themselves for what could be a defining transformation in global finance. Tokenisation represents the conversion of assets, whether physical or digital, into blockchain-based tokens that can be more easily traded, divided or transferred and, moreover, the tokenised market could reach $24 trillion by 2027, representing approximately 10% of global GDP.
Certainly, the technology has advanced considerably in recent years, with enhanced scalability, improved interoperability and evolving regulatory frameworks fostering a more favourable environment for institutional adoption. From real estate and commodities to equities, bonds and even data, virtually any asset can be tokenised. The potential benefits are numerous, including increased liquidity for traditionally illiquid assets, fractional ownership opportunities, reduced settlement times, lower transaction costs, programmable compliance and enhanced transparency. However, despite these advantages, widespread adoption has been slower than many early proponents anticipated with the primary obstacles having included regulatory uncertainty, infrastructure limitations and institutional hesitancy. Against this backdrop, Ripple, the company behind the XRP cryptocurrency, has been making calculated moves to position itself as a key infrastructure provider in the tokenisation ecosystem. Most notably, Ripple has engaged in strategic acquisitions to strengthen its capabilities across the entire tokenisation value chain. In May 2023, Ripple acquired Metaco (a crypto custody firm) for $250 million. This acquisition represented a significant investment in secure digital asset custody infrastructure, a critical component for institutional adoption of tokenised assets.
Ripple acquires HiddenRoad
Source: X
Meanwhile, Metaco, founded in 2015, had established itself as a trusted provider of digital asset custody and tokenisation solutions for financial institutions. Its Harmonize platform enables banks and other financial entities to securely store, trade and manage digital assets - capabilities that complement Ripple's existing offerings. With the acquisition of Metaco, Ripple has secured control over a key piece of infrastructure essential for financial institutions to safely interact with digital assets. This move is particularly significant, as custody solutions form the foundational layer upon which institutional tokenisation efforts are built. More recently, Ripple has continued its infrastructure acquisition strategy with HiddenRoad for $1.25billion, further cementing its position across the tokenisation value chain. As the above illustrates HiddenRoad is a key infrastructure provider dealing with over 300 institutions and which clears over $3trillion of assets p.a. However, are these acquisitions an attempt by Ripple to own and control key infrastructure components necessary for tokenisation to move from experimentation to mainstream adoption? Without doubt, Ripple's acquisitions highlight its focus on three core infrastructure pillars essential for tokenisation - custody, payments and market making:· custody - secure custody solutions represent perhaps the most fundamental requirement for institutional participation in the tokenised asset ecosystem. Financial institutions have fiduciary responsibilities that demand enterprise-grade security, compliance capabilities and governance frameworks. Through its Metaco acquisition, Ripple now offers institutional-grade custody solutions that address these requirements. A survey commissioned by Nickel Digital Asset Management revealed that 76% of institutional investors and wealth managers from the US, UK, France, Germany and the UAE view security and custodial concerns as major obstacles to entering the digital asset market. Without a strong custody infrastructure, institutional involvement in tokenised markets will remain constrained. By addressing this critical need, Ripple is eliminating a major barrier to wider adoption.
· payments - Ripple has long positioned itself as a payments-focused blockchain company, with its RippleNet product offering cross-border payment solutions to financial institutions. This existing payments-infrastructure complements tokenisation efforts, as efficient settlement mechanisms are essential for tokenised asset transactions. The ability to efficiently transfer value between parties is a cornerstone of functional tokenised asset markets. In this context, Ripple's focus on payments infrastructure delivers a crucial piece of the tokenisation puzzle.
· market making - the acquisition of HiddenRoad bolsters Ripple's market-making capabilities, addressing another crucial aspect of tokenised markets: liquidity. For tokenised assets to gain traction, market participants need assurance that they can buy or sell with minimal price slippage and in sufficient volume. Market making is frequently neglected in discussions regarding blockchain infrastructure, yet it is vital for the smooth operation of markets. Tokenised markets cannot function effectively without sufficient liquidity providers.
Hence, by focusing on these three core infrastructure components, Ripple appears to be building a comprehensive ecosystem that addresses the primary requirements for institutional tokenisation adoption. Interestingly though, Ripple appears to have shifted its strategic focus away from central bank digital currencies (CBDCs). As reported by U.Today, Ripple's website no longer prominently features CBDCs, sparking debate within the XRP community about the company's strategic direction. This strategic pivot suggests Ripple may be concentrating its efforts on private sector tokenisation opportunities rather than government-led initiatives. Industry analysts speculate this could reflect a pragmatic assessment of where tokenisation adoption is likely to progress most rapidly. So, as central banks around the world continue to explore CBDCs, the private sector may present more immediate opportunities for implementing tokenisation. Ripple's apparent shift could signal where it sees the greatest potential in the near term. The market has responded positively to Ripple's strategic moves. Correspondingly, Ripple's head of custody, Sagar Shah, highlighted that the crypto custody market could approach, or even exceed, $10 trillion by 2030, largely driven by increased institutional adoption.
Financial institutions that were once hesitant about tokenisation are now actively pursuing partnerships and pilot programmes. Banking giant, HSBC, recently launched its HSBC Orion platform for digital bond issuance, whilst Singapore's DBS Bank has expanded its digital exchange to include tokenised securities. There is a clear change in how institutions view tokenisation with established players such as Ripple entering the infrastructure space, boosting the technology’s credibility and encouraging deeper exploration. Moreover, despite positive momentum, significant challenges remain for tokenisation adoption. Regulatory frameworks continue to evolve unevenly across jurisdictions, creating compliance complexities for global operations. Additionally, technological standardisation efforts are still maturing, with interoperability between different blockchains remaining a concern. The regulatory landscape continues to be the main barrier to widespread tokenisation adoption. Without clear and consistent regulatory frameworks, institutional adoption is likely to remain hesitant. Technical challenges also persist; blockchain scalability, though improved, still presents limitations for high-frequency trading environments and enterprise integration with legacy systems introduces additional complexities that must be addressed for seamless adoption.
So, the evidence suggests tokenisation may indeed be approaching an inflection point. Ripple's strategic infrastructure acquisitions signal growing confidence in tokenisation's future whilst increased institutional engagement indicates shifting perceptions about the technology's viability. The combination of advancing technology, evolving regulatory frameworks and strategic moves by influential players such as Ripple has created an environment ripe for the rapid adoption of tokenisation. The real question now is not whether tokenisation will reshape finance, but when and at what pace. For financial institutions, the implications are clear: the time for mere observation has passed. Those who fail to develop tokenisation strategies risk being left behind as the financial infrastructure evolves. Ripple's moves to control critical infrastructure components may represent just the beginning of a broader industry transformation that will reshape how assets are issued, traded and settled in the coming years. Therefore, as we stand at this potential inflection point, the second part of this analysis will explore what specific conditions and developments are needed for tokenisation to achieve its transformative potential across global financial markets.
This article first appeared in Digital Bytes (14th of May, 2025), a weekly newsletter by Jonny Fry of Team Blockchain.