Tokenisation Is No Threat to Traditional Finance – It’s the Future

By Jesse Knutson, Head of Operations, Bitfinex Securities This article was originally posted on WealthBriefing . Beyond the noise, volatility and price swings of cryptocurrency markets is tokenised securities, a nascent asset class that is powered by the underlying technology associated with cryptocurrencies such as bitcoin. Physical and financial assets, from real estate to US Treasury Bills, can be tokenised using blockchain technology, meaning that a digital representation of the asset is created which can be exchanged securely among investors in real time. Some areas of capital markets infrastructure have been resistant to internet-era technological changes. Major financial markets conversely require central depositories, delayed settlement and have limited trading hours. Tokenisation is the first genuine opportunity the world has had in generations to rethink finance, modernise and do things differently. For decades, governments, businesses and individuals – particularly in emerging economies and industries – have struggled to access capital through legacy markets and organisations. Tokenisation actively removes these barriers to change the global landscape for both issuers of capital and investors in such assets. Issuers are given a more direct link to their investors, creating significant operational efficiencies and cost savings, while investors gain a far greater degree of flexibility and freedom of use. Why Tokenise Assets in the First Place? Tokenised assets are digital representations, often described as “tokens,” of an underlying asset that is listed on regulated platforms. For instance, a tokenised bond retains all traditional bond characteristics, such as principal, interest rate and maturity date, but is issued, represented and traded using blockchain technology rather than paper certificates or centralised electronic records like its traditional counterpart. Blockchain is a secure, decentralised ledger that stores records across a network of multiple computers. This allows issuers and investors to verify ownership, payment history and asset performance in real time. This level of transparency reduces information asymmetry, which is often a key driver of fear and volatility for investors in the murky markets that have been prevalent as of late. The disintermediation also ensures that investors seeking to re-allocate their capital can do so through instant settlement or trading on liquid secondary markets, which can be critical during times of market flux. Identifying Opportunities in the Tokenised Market To give an idea of how these tokens are behaving in the current market, there are tokens that invest in short-term US Treasury Bills, which have notably been less affected by recent market volatility. In fact, the total market cap of tokenised US Treasuries as at 1 April 2025 was $5.12 billion – as at 20 May 2025, the figure now sits at $7.00 billion, representing a 37 per cent increase despite the tariff saga (1). These tokens can attract investors who may typically struggle to access US Treasuries directly due to geographical restrictions. With low minimum tickets to invest in the primary market, retail and institutional investors alike can often access, and even trade, these assets on secondary markets. Meanwhile, small- to mid-sized governments and businesses are issuing compelling tokenised securities that are accessible to all types of investors, some of which offer coupons with returns ranging from 8 per cent to 15 per cent with typically sub-five-year maturities. Thoughtful Innovation Outsmarts Unfounded Scepticism It is no secret that some segments of the traditional financial world remain sceptical about tokenisation. Despite real-world examples of successful tokenised issuances, vocal naysayers continue to express scepticism about the slower-than-anticipated uptake of tokenisation in today’s financial markets, with McKinsey & Company reporting a base case market size of $2 trillion for tokenised assets by 2030 as broad adoption is “still far away.” (2). Some institutions and regulators remain in “wait and see” mode, while concerns over blockchain’s feasibility and complexity have been raised by others. No technological system is perfect, but blockchain’s functionality and potential to modernise global capital markets is undeniable. In the US, for example, pressure is growing – including from the likes of Larry Fink – for the SEC to put in place clear rules and regulations for tokenised securities (3). There is a good chance that this will happen during President Trump’s term and, if this is the case, it could provide the catalyst for exponential growth of tokenised securities. Tokenisation provides an opportunity to update the technology behind capital markets and increase access to capital globally. Rather than being problematic, blockchain is ready and fit for purpose to deliver the scale, efficiency and privacy controls required to leverage the benefits of tokenisation and provide an alternative investment opportunity for discerning investors. There is a lot that the old world can learn from the new, and financial markets, regulators and policymakers must embrace new technology as we move forward into a new era of finance. The post Tokenisation Is No Threat to Traditional Finance – It’s the Future appeared first on Bitfinex blog .

Source: Bitfinex blog