In the recent surge of the cryptocurrency market, billions of dollars were attracted, providing funding for the development of a decentralised global network. Major US financial institutions are actively seeking to offer clients exposure to Bitcoin and cryptocurrencies. They are exploring Web3 use cases to enhance customer engagement, optimise processes, and create efficiencies.
The asset tokenisation market is evolving into a trillion-dollar opportunity, securing ownership rights, boosting liquidity, and making transactions more convenient and transparent. Tokenising assets on blockchains enhances asset ownership mobility, settlement speed, visibility, and process automation. Significant cost savings can be achieved by improving back-office and middle-office infrastructure, transaction settlement processes, and data management systems.
Blockchain tokenisation converts assets into digital token securities that represent whole or fractional ownership. Blockchain, smartcontracts, and token securities enable illiquid asset fractionalisation, efficient payments, and a range of financial benefits. Tokenised assets can be securely transported within a decentralised blockchain network, connecting global markets and enabling participation in decentralised finance systems.
AssetTokenisation is anticipated to benefit all asset classes, including private capital markets, asset-backed securities, money market funds, and intellectual property. Currently, tokenised assets amount to only $77 billion, indicating significant market potential as more assets become accessible through tokenisation.
– Several financial institutions have implemented institutional tokenisation initiatives. JP Morgan focuses on tokenising traditional assets like U.S. Treasuries and money market fund shares. Its Onyx division develops digital asset infrastructure and networks, including JPM Coin and the Liink network for cross-border transfers.
– Broadridge technology platforms use the Daml language for its Distributed Ledger Repo, delivering significant cost savings compared to previous repo technology solutions.
– Private equity firm KKR launched a tokenized private equity feeder fund on the Avalanche blockchain, significantly lowering the investment threshold and increasing accessibility.
– Other firms like Hamilton Lane and Figure Technologies have also embraced tokenization to increase access to private markets.
– Additionally, a consortium of major financial institutions, including Apollo, BlackRock, Blackstone, BNY Mellon, and others, focuses on blockchain technology and alternative investments.
These initiatives and collaborations demonstrate the growing interest and potential of blockchain and asset tokenisation in revolutionising the financial industry and opening up new opportunities for investors and institutions alike.