In 2025, asset tokenisation stands out as a transformational innovation poised to reshape the global financial ecosystem. By digitising real-world assets (RWAs) and financial instruments on blockchains, tokenisation promises to unlock trillions in liquidity, democratise access and build new infrastructure for a programmable financial economy. Yet, this promise comes against a backdrop of fragmented regulation, scalability challenges and evolving market dynamics. The trajectory of tokenisation in the next decade will depend on how these complexities are balanced.
Larry Fink discussing the future of finance
Source: X
The promise of tokenisation: efficiency, inclusion and transparency
Tokenisation converts ownership rights to assets (ranging from US treasuries, real estate and private credit to ESG-linked projects) into blockchain-powered digital tokens. This allows fractionalised ownership, seamless peer-to-peer transfers and 24/7 trading on interoperable platforms. The benefits are compelling, including:
· faster settlements - tokenised securities can settle near-instantly, replacing outdated T+2 or longer cycles, reducing counterparty risk.
· lower costs - automation via smart contracts reduces manual reconciliation, lowers custodian fees and compresses reconciliation timelines. Indeed, according to in-depth analysis by Calastone, if funds tokenised operating costs could fall by as much as 23% for funds, which could save the asset management industry over $135bn.
· broadened participation - fractional ownership lowers barriers to entry, enabling retail investors to access asset classes that were previously institutional-only.
· enhanced transparency and ESG tracking - on-chain provenance helps improve trustworthiness and reporting of sustainable investments.
· underpinning of institutional optimism - Boston consulting group believes tokenisation could exceed $16trillion by 2030 and the World Economic Forum has predicted that 10% of world GDP would be stored on blockchain by 2027 (equating to roughly $8–10 trillion of value on-chain).
Market momentum: case studies illustrating the shift
Several high-profile examples showcase accelerating adoption and tangible impact:
· BlackRock’s tokenised bond fund - this Ethereum-based fund raised $375 million within a week post launch, capturing 30%+ of tokenised Treasury bond market share. BlackRock’s push signals mainstream finance’s embrace of blockchain as core infrastructure. BlackRock’s tokenised $ money market fund has now attracted over $2.8billion.
· Franklin Templeton’s BENJI fund - a blockchain-based money market fund holding $730million+ in tokenised short-term US treasuries, BENJI merges traditional yield with DeFi compatibility for global digital access.
· Ondo Finance’s USDY - this token-backed stablecoin-like instrument is collateralised by government bonds, offering yield for crypto-native investors and blurring the digital/real asset divide. It has attracted over $620million of assets.
· Singapore’s Project Guardian - a collaboration between the Monetary Authority of Singapore, JPMorgan, DBS and HSBC, this initiative pilots blockchain-based cross-border settlement using tokenised bonds and digital cash, demonstrating regulatory cooperation and multi-institutional governance.
The institutionalisation trend is reflected in market scale: by mid-2025, tokenised US Treasury products surpassed $7.4 billion, an 80% YTD increase, signalling institutional asset managers’ growing appetite for on-chain yield strategies.
Regulatory fragmentation: a barbell challenge
Tokenisation’s rapid progress is shadowed by a fragmented regulatory landscape. Global jurisdictions vary widely in approaches, causing jurisdictional arbitrage - the shifting of activity to less regulated but riskier markets. This potentially risks creating disjointed liquidity pools and can deter broad investor confidence. The UK’s Crypto Assets Order 2025 and forthcoming Property Digital Assets Bill aim to bring crypto platforms and tokenised property assets under supervision. The EU’s MiCA regulatory framework also introduces unified rules for digital assets, yet enforcement timing and technical implementation remain challenges.
Who is most to blame in the UK for the lack of progress in scaling token markets?
Poll data from the Future of Finance event reveals market actors see regulatory lapses and poorly conceived token products as major hurdles. Over 50% of respondents warn that continued regulatory fragmentation could stall scaling and harm market integrity. Experts advocate an “intelligent partnership” model where the state and private sector co-design compliance models, automation and standards. This approach aims to simultaneously foster innovation and investor protection, essential for sustainable tokenisation growth.
Technological backbone: automation and interoperability
Tokenisation is inseparable from the underlying technology stack: distributed ledgers, smart contracts and interoperability protocols. Smart contracts automate asset servicing functions, dividend distribution, coupon payments and compliance verifications whereby converting slow, error-prone manual processes into fast, auditable ones. Atomic settlement, i.e. the simultaneous exchange of tokenised securities for payment tokens on-chain, reduces counterparty and liquidity risk drastically versus legacy settlement systems. This will help securities markets move to T0, e.g. same day settlement which, according to Gresham Technologies, will: “speed[ing] up settlement times could unlock billions of dollars in capital, stimulate economic growth, and reduce systemic risks.” Interoperability protocols, including cross-chain bridges, enable assets to move fluidly across blockchain ecosystems, creating diverse liquidity pools and broadening investor access. Along with AI-powered monitoring tools enhance real-time risk assessments and transaction surveillance, crucial for regulatory adherence in a rapidly evolving market environment. Whilst the emergence of unicorn platforms such as Partior and Archax underscores opportunity, FCA sandbox data warns of fail rates and market volatility inherent in nascent fields. The democratising power of tokenisation lies in opening markets traditionally gated behind regulatory and capital thresholds. Fractional, tokenised ownership of infrastructure assets or ESG projects can invite retail investors whilst increasing funding for sustainable development. The challenge will be how well market participants and regulators can harmonise to embed trust, security and governance into token platforms.
According to a Broadridge 2025 report, 63% of custodians already offer tokenised assets, and 30% more plan to within two years, suggesting institutional acceptance is accelerating. Tokenisation promises to redefine capital markets, enable real-time finance and broaden access beyond traditional boundaries. The technology can dramatically increase market efficiency, reduce counterparty risk and democratise finance. Effective regulatory co-operation, robust compliance
automation and interoperable protocols will be critical in converting pilot projects into core financial infrastructure. The journey ahead is complex: balancing innovation and investor protection while avoiding market fragmentation requires public-private partnership at an unprecedented
scale. As tokenisation moves from theory to transformative reality, 2025 represents a decisive year. The coming decade will test whether digital assets become the backbone of global finance or remain marginal curiosities.
This article first appeared in Digital Bytes (11th of November , 2025), a weekly newsletter by Jonny Fry of Team Blockchain.