The conversation around digital assets has matured significantly over the past few years. What began as a debate about cryptocurrencies has evolved into something far more consequential: the future architecture of money itself.

Today, central banks, commercial banks, regulators and financial market infrastructures are no longer asking whether distributed ledger technology works. The more important question is how money, settlement and financial markets should operate in a world where assets and payments can move together on programmable infrastructure.

In Part I of this Institutional Dialogue Series, I sit down with DH Kim, Senior Director, AI & On-Chain Finance, Shinhan Bank to explore why institutions are increasingly focused on tokenised money, settlement architecture and the rebuilding of financial infrastructure. Rather than discussing tokenisation as an asset story, this conversation examines the foundations beneath the market: deposits, stablecoins, wholesale CBDCs, settlement finality and programmability.

What emerges is a consistent theme. The transformation underway is not simply about making payments faster. It is about redesigning how value moves through the financial system, reducing fragmentation between assets and money, and enabling new forms of automation that existing infrastructure struggles to support.

Part I covers:

1. The Drivers of Change: Q1–Q3

• Structural inefficiencies in today’s financial system

• Why institutional attention has shifted from crypto markets to infrastructure

• Why banks are revisiting the nature of deposits

2. Tokenised Money & Settlement: Q4–Q7

• Problems tokenised deposits can solve

• Differences between stablecoins, tokenised deposits and wholesale CBDCs

• Why settlement has become a strategic issue

• The structural advantages banks continue to hold

3. The Future Architecture of Finance: Q8–Q10

• The role of programmability in money and markets

• Whether the industry is digitising or rebuilding infrastructure

• The most common misconceptions institutions still hold today

This first instalment explores a simple but important idea: the future of finance may not be defined by new assets, but by new forms of money and the infrastructure that allows them to move with certainty, finality and programmability.

Q1. What structural inefficiencies are pushing institutions toward programmable forms of money?

Start with what actually happens when you move money today. A payment is not one thing. It is a message, a pile of reconciliation, and a transfer of value, and all three run on separate systems owned by separate intermediaries. Picture sending someone money and posting them a parcel separately: you agree the deal in a moment, but the cash and the thing it pays for travel by different routes and arrive at different times. Between trade and final settlement, your cash and assets are stuck in transit, and that is where the cost hides: trapped intraday liquidity, collateral you cannot reuse, endless reconciliation, and settlement risk you hold capital against.

The BIS puts it well: tokenisation folds messaging, reconciliation and the transfer of value into a single step on one shared ledger. The real problem is not that payments are too slow; it is that the design keeps money and the things money buys on separate ledgers, so they can never move as one. Close that gap, and most of the cost and risk in wholesale finance has nowhere left to hide.

Q2. Why has the conversation shifted from speculative crypto markets toward institutional infrastructure?

Because the technology and the asset class turned out to be two different things, and the serious players kept one and dropped the other.

Think of the dot-com bust: most of the hyped companies vanished, but the internet did not, and the institutions quietly absorbed the plumbing. Same here. In its 2025 Annual Economic Report the BIS laid out a tokenised unified ledger of central bank reserves, commercial bank money and government bonds as the next shape of the system. Project Agorá, run out of the BIS Innovation Hub, now pulls together eight central banks, including the Bank of England, the New York Fed and the Bank of Korea, with more than forty private firms, and in May 2026 it moved towards real-value testing.

Meanwhile the US passed its first federal stablecoin law, the GENIUS Act, in July 2025, and the EU’s MiCA has covered stablecoins since mid-2024. When central banks build the rails and legislators draw the lines, the conversation has moved. This is an infrastructure question now, owned by the people who run the plumbing.

Q3. Why are banks revisiting the nature of deposits rather than simply upgrading existing payment rails?

Because a faster rail still carries the same thing it always did: a claim that settles later, somewhere else.

Speeding up the rail is like giving a courier a faster bike; re-forming the deposit is asking whether you still own the parcel. The deposit itself, the liability on the bank’s balance sheet, is just a record in a database that has to be reconciled against everyone else’s. It cannot carry logic, and it cannot settle in the same motion as the thing it pays for. A tokenised deposit can: it turns the bank’s own liability into a programmable, transferable object on a shared ledger, still settling in central bank money inside the two-tier system.

That is why the BIS reckons tokenised deposits, unlike stablecoins, hold on to the singleness of money. So the real question is not how to move deposits faster. It is whether, in a programmable world, banks reissue their core product in that form, or let someone else’s instrument become the programmable unit and quietly demote themselves to a funding source behind it. That is about the franchise, not the plumbing.

Q4. What problems can tokenised deposits solve that traditional electronic money systems struggle to address?

Three things, mainly. First, atomic settlement: a simultaneous swap where neither side hands over until both do, like an escrow that completes in an instant. Because cash and asset sit on the same ledger, you deliver one only if the other is paid, killing the lag and principal risk between today’s separate payment and delivery legs.

Second, programmability: logic built into the money itself, so it behaves like a vending machine, releasing only when conditions are met. A payment goes through on delivery; margin moves on its own; funds lock and unlock on an event. The UK’s Regulated Liability Network experiment showed exactly this on tokenised commercial bank money.

Third, one shared source of truth, which strips out whole layers of reconciliation rather than just speeding them up. In short, tokenised deposits make intraday repo, automated collateral management and genuine delivery-versus-payment ordinary instead of exceptional. Conventional electronic money can move a balance fast. What it cannot do is make that balance behave.

Q5. How do you distinguish stablecoins, tokenised deposits and wholesale CBDCs from an institutional banking perspective?

This matters more than any other, and mixing the three up is the mistake I see most. Ask two questions: whose liability are you holding, and where does it finally settle? Picture three things in your wallet: a shop’s gift card, your current-account balance, and a banknote. They all spend, but they are not the same kind of money.

A stablecoin is the gift card: handy, accepted in its own circle, but ultimately the issuer’s promise, worth what someone will give you on the day. The FSB is clear the word is descriptive, not a legal category. It is a bearer-style instrument, issued against reserves, passing holder to holder, now being pulled into regulation under the US law and MiCA. But the BIS’s worry stands: because it can trade away from par, it sits awkwardly with the singleness of money.

A tokenised deposit is your current-account balance, but able to move and carry instructions: a claim on the issuing bank, not a bearer instrument, settling in central bank money inside the two-tier system, which is why the BIS treats it as consistent with singleness. A wholesale CBDC is the banknote: a direct liability of the central bank, restricted to financial institutions, the risk-free asset everything else settles against.

In summary, a stablecoin is usually someone else’s liability you might distribute; a tokenised deposit is your own liability rebuilt; a wholesale CBDC is the settlement leg that anchors both. Different layers of the money stack, not three versions of one thing.

Q6. Why is settlement increasingly a strategic issue rather than simply an operational function?

Because settlement is where the money actually changes hands, so it is where the risk, the liquidity and the economics pile up.

The plain danger? Paying for a car and the dealer going under before the keys are in your hand. That is basically Herstatt: in 1974 a German bank was shut down after counterparties had paid one leg of their foreign-exchange trades but before they received the other, and they lost the principal. The fix, payment-versus-payment, is a design choice, not an operational footnote.

The architecture you pick decides whether value settles with finality, how much liquidity is trapped in transit, how fast collateral can be reused, and how much capital you tie up against deals in flight. The BIS is blunt that only central bank money can ultimately guarantee finality. The shift to T+1 settlement, live in the US and locked in for October 2027 in the UK and EU, is just the visible edge of the same move. Whoever controls the settlement layer controls the economics on top of it.

Q7. Stablecoins have demonstrated speed and global accessibility. What advantages do banks still retain structurally?

Stablecoins are genuinely fast, programmable and globally reachable, and it would be a mistake to wave that away. But speed is something you can buy. Anyone can open a faster coffee shop; not everyone can be the bank the other banks settle with. A bank deposit settles in central bank money, with finality only a central bank can give, inside a two-tier system with deposit insurance and supervision behind it, which is why it trades at par every time.

The BIS frames the contrast as singleness, elasticity and integrity. Elasticity is the quiet one: a bank lends money into existence and pulls it back, breathing with the economy like a pair of lungs; a fully reserved stablecoin just holds its breath. So it is not banks versus stablecoins on speed. A stablecoin is a fast bearer claim that may not always be at par and does not settle in central bank money; a bank owns the par-settlement relationship and the power to create credit. Those are the moats. The smart move is to put the tokenisation and programmability on top of the liability banks already own.

Q8. How important is programmability in the future evolution of money and financial markets?

Programmability is the whole point. If I had to name the one feature that justifies rebuilding rather than tuning, this is it, ahead of speed and cost. It means putting conditional logic straight into money and assets, so payment, delivery and the compliance checks fire as one action instead of separate instructions bouncing between systems.

Picture a railway where the signals are built into the track, so trains coordinate automatically, instead of a signalman phoning ahead. That is the shift: from messaging about value to value that carries its own instructions. It is the heart of the BIS’s unified-ledger idea. One caveat: programmability is only as sound as the settlement asset underneath it. Build clever logic on money that cannot guarantee finality or hold par, and you have built something sophisticated on a shaky foundation. The two have to move together, which is why the work on tokenised deposits and central bank money matters as much as the smart-contract cleverness.

Q9. Is the system moving toward a fundamentally different settlement architecture, or simply digitising existing infrastructure?

Long term, this genuinely is a different architecture, not a fresh coat of paint: the unified ledger puts assets and money on shared, programmable infrastructure settling atomically, against a present where value still moves as messages between siloed systems reconciled after the fact.

But think of the first motor cars, the horseless carriages, built like a cart with an engine bolted on before anyone redesigned the vehicle. We are at that stage. Most of what is live in 2026 is bridge-building. The Bank of England’s renewed RTGS went live in April 2025, and its synchronisation interface, which would let central bank money settle atomically against outside ledgers, is still experimental. The sterling Fnality Payment System is live, settling a tokenised claim on central bank reserves, but in a narrow first phase. The ECB has committed to a two-track path, near-term and end-of-decade. And Project Agorá has only just moved from prototype to real-value testing. So: we are digitising and connecting the existing system today, and re-architecting it over a five-to-ten-year horizon.

Q10. What misconceptions do institutions still have about tokenised money today?

A few keep coming up, and they are expensive. First, treating stablecoins, tokenised deposits and wholesale CBDCs as the same thing; they are different liabilities, different risk, settling in different places. Second, thinking this is about speed; programmability and atomic settlement are the substance. Third, the leftover assumption that it is a crypto play, when the institutional work has moved to settlement and infrastructure. Fourth, imagining you can engineer finality away with clever code; you cannot, because finality rests on central bank money.

Underneath them all is the idea that tokenised money is a technology decision to hand to the platform team. It is not. Treating it that way is like a newspaper in 2005 deciding the internet was a printing question. It is a decision about whose money you issue and hold, where it settles, and with what finality, and it belongs at the most senior table in the building. Treat it as an IT upgrade and you will find you outsourced a strategic choice without noticing.

So that is why the infrastructure is being rebuilt. Not just for speed, but to get money and the things it buys onto the same programmable ledger, settling with finality. The institutions that see this as a question about money, not technology, are the ones that will shape what comes next.

DH Kim Bio

DH Kim is Senior Director at the London branch of Shinhan Bank, one of South Korea’s top-five banks, leading its onchain-finance agenda across EMEA. With a background spanning banking, insurance (Samsung Life) and consulting (Oliver Wyman, Deloitte), he leads strategy development and execution for the bank’s tokenisation initiatives in the region.

Gaya Chandrasekaran Bio

Gaya Chandrasekaran has nearly two decades of experience in corporate and investment banking within global financial institutions, spanning origination, structuring and risk oversight of complex financial products across corporates and financial institutions.

Her background combines front-office commercial deal-making with senior executive risk management. Having operated as both a corporate and investment banker and as Deputy Head of Wholesale Credit Risk, she maintains a comprehensive view of the institutional lifecycle, from client origination through to balance sheet and regulatory considerations.

She has served on senior risk committees with delegated authority and has led complex regulatory and portfolio-level decision making across large institutional exposures.

Drawing on this experience, her current work focuses on the institutional adoption of tokenization and the evolution of financial market infrastructure. She works across advisory mandates, research and industry engagement, translating emerging technologies into business, risk and governance frameworks that can be implemented within institutional environments. Her work includes supporting institutional partnership development and designing execution pathways for adoption as well as delivering targeted research and strategic insight. She is the author of the whitepaper, Tokenisation at Scale: Institutional Architecture as the Decisive Factor, which examines the operational, regulatory and market infrastructure requirements for institutional adoption at scale.

Gaya contributed to the Tokenization Playbook 2026 with Evergon Labs and actively participates in industry dialogue on the future of tokenized financial markets. She serves as an Executive in Residence (June 2026 Cohort) for Global Digital Finance. She also serves as President of the Alumni Tech Club at London Business School, where she convenes discussions on digital assets, tokenization and financial market infrastructure with senior industry leaders, policymakers and market practitioners.

References

1. BIS. Annual Economic Report 2025, Ch. III: The next-generation monetary and financial system. 24 June 2025. https://www.bis.org/publ/arpdf/ar2025e3.htm

2. BIS. Project Agorá shows how tokenisation can improve wholesale cross-border payments; work will advance to real-value testing. 27 May 2026. https://www.bis.org/press/p260527.htm

3. US Congress. S.1582, GENIUS Act, 119th Congress; Public Law 119–27, 18 July 2025. https://www.congress.gov/bill/119th-congress/senate-bill/1582

4. European Banking Authority. Asset-referenced and e-money tokens (MiCA); Titles III and IV applicable from 30 June 2024. https://www.eba.europa.eu/regulation-and-policy/asset-referenced-and-e-money-tokens-mica

5. Garratt, R. and Shin, H.S. Stablecoins versus tokenised deposits: implications for the singleness of money. BIS Bulletin №73, 11 April 2023. https://www.bis.org/publ/bisbull73.htm

6. UK Finance. Regulated Liability Network (RLN) Experimentation Phase, Final Reports. September 2024. https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/rln-reports-2024

7. Financial Stability Board. High-level Recommendations on Global Stablecoin Arrangements: Final Report. 17 July 2023. https://www.fsb.org/2023/07/high-level-recommendations-for-the-regulation-supervision-and-oversight-of-global-stablecoin-arrangements-final-report/

8. BIS. Annual Economic Report 2021, Ch. III: CBDCs, an opportunity for the monetary system. 23 June 2021. https://www.bis.org/publ/arpdf/ar2021e3.htm

9. CPMI (BIS). Delivery versus payment in securities settlement systems (1992) and the CPMI glossary (DvP, PvP, settlement finality; Herstatt / FX settlement risk). https://www.bis.org/cpmi/publ/d06.htm

10. SEC, statement on T+1 implementation (US live 28 May 2024); FCA, About T+1 settlement (UK and EU from 11 October 2027). https://www.sec.gov/newsroom/press-releases/2024-62

11. Bank of England. Renewed RTGS service goes live, 28 April 2025; RTGS Renewal Programme and synchronisation work. https://www.bankofengland.co.uk/news/2025/april/renewed-rtgs-service

12. Fnality International. Sterling Fnality Payment System: initial operations (December 2023) and settlement-finality designation (December 2024). https://fnality.com/news/sterling-fnality-payment-system-receives-settlement-finality-designation

13. European Central Bank. ECB commits to DLT settlement plans with a dual-track strategy (Pontes and Appia). 1 July 2025. https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250701~f4a98dd9dc.en.html

Note on Sourcing: every load-bearing claim is drawn from a primary or authoritative source (central banks, the BIS, the FSB, regulators and primary legislation). Market-size and transaction-volume figures are deliberately omitted. Analogies are illustrative only.

P.S. In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart

https://www.saatchiart.com/en-gb/cgayasart

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with multiple awards, the VAA Art100 International Art Prize, the Collectors Art Prize | Art Legends of Our Time and the Persona Art Honours.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience, the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Why time compression is the real balance-sheet unlock

Liquidity in modern markets is not constrained by asset availability. It is constrained by time. Settlement cycles, margin mechanics, and operational cut-offs dictate how much of the balance sheet institutions must hold idle. This article argues that settlement should be understood not as a back-office function, but as a balance-sheet management tool — and that targeted use of distributed ledger technology (DLT) is already compressing time in ways that materially change balance-sheet economics.

This relationship is not theoretical. The Depository Trust & Clearing Corporation (DTCC) has estimated that shortening settlement cycles can materially reduce margin requirements purely through time compression. In its analysis of a move from T+2 to T+1 settlement, DTCC estimated that the volatility component of clearing margin requirements could fall by up to 41%, without any change in underlying risk exposure (Source: U.S. SEC Release No. 34-94196, 2022).

The diagram below highlights the level of impact of DLT-based Securities on workflow efficiency, financials and value creation and risk mitigation across the Securities lifecycle. The high impact with respect to post-trade processes (i.e., clearing & settlement) positively affects liquidity across the securities lifecycle. The chart shows where time, reconciliation, and operational handoffs accumulate and why settlement mechanics increasingly shape balance-sheet usage.

European regulators have made this linkage explicit. In its assessment of shorter settlement cycles, the European Commission noted that faster settlement directly reduces settlement and replacement-cost risks, while also lowering the need for margin (Source: European Commission, Shortening the EU settlement cycle, 2025).

Subscribe now

Liquidity is a timing problem

When markets seize, it is rarely because assets disappear. It is because assets cannot be mobilised quickly enough to meet obligations.

Across repos, derivatives, and collateralised funding markets, institutions face a familiar mismatch:

• liquidity is required intraday

• settlement and collateral movement occur later

• buffers are built to bridge the gap

Those buffers consume balance sheets, inflate funding costs, and become stress amplifiers during volatility.

Operational stress becomes most visible during transitions. Ahead of the U.S. move to T+1 settlement, industry estimates suggested that settlement failures could rise from 2.9% to 4.1% as firms adjusted processes and liquidity buffers, a reminder that liquidity strain often reflects infrastructure readiness rather than asset risk (Source: Reuters, May 2024).

What settlement actually does to balance sheets

Settlement determines:

• how long assets remain encumbered

• how long cash is unavailable for reuse

• how large prefunding and liquidity buffers must be

Even modest delays compound. A ‘T+1’ or ‘T+2’ settlement cycle may look operationally acceptable, but economically it forces institutions to carry liquidity against exposures that no longer exist in risk terms but only in process terms. This is not a pricing problem. It is an infrastructure problem.

Why repos expose the issue most clearly

Repos sit at the intersection of funding, settlement, and collateral. They are therefore the clearest lens through which to view settlement as a liquidity tool. Despite a large share of repos being overnight or shorter-dated, traditional settlement mechanics prevent institutions from:

• accessing funding exactly when needed

• reusing collateral intraday

• releasing assets immediately once exposure ends

The result is excess balance-sheet usage for short-lived risk.

Time compression changes the economics

When settlement occurs with precision, the economics change. DLT-enabled settlement allows:

• pre-defined settlement and maturity times

• atomic delivery-versus-payment

• intraday settlement measured in hours, not days

This compresses the margin period of risk, reduces replacement cost exposure, and shortens the duration for which the balance sheet is consumed. Time, in effect, becomes programmable.

Industry analysis of live deployments shows that DLT-based settlement can support repo transactions that span hours rather than days, materially shortening the margin period of risk (Source: GFMA / BCG, The Impact of Distributed Ledger Technology in Capital Markets, 2025).

From buffers to precision

Traditional liquidity management relies on buffers because processes are imprecise.

As settlement becomes more precise:

• prefunding requirements fall

• excess margin can be released sooner

• intraday liquidity can be actively managed rather than passively held

This is why settlement speed is not about “real-time everything”. It is about choosing where precision matters. Repos and collateral movements are prime candidates.

Why this is regulator-aligned

Importantly, compressing settlement time does not weaken risk controls. It strengthens them.

Shorter settlement cycles:

• reduce principal and replacement cost risk

• lower settlement fails

• improve transparency for supervisors

In practice, regulators aren’t trying to replace existing infrastructure; they’re focused on how DLT-based settlement can sit alongside what already works.

Evidence from production environments

Live market deployments already demonstrate that:

• intraday repo settlement can be executed safely within existing legal frameworks

• atomic settlement materially reduces settlement fails

• precise settlement timing improves intraday liquidity management

These are not proofs of concept. They are operational tools being used in production today.

In production environments, DLT-based platforms have demonstrated the ability to settle repo transactions within minutes, while remaining compatible with existing triparty, custody, and legal structures (Source: GFMA / BCG, Deep Dives: Impact of DLT in Capital Markets, 2025). Examples of scaled adoption cited in industry studies include platforms operated by J.P. Morgan Kinexys and Broadridge Distributed Ledger Repo, both focused on intraday settlement efficiency and collateral mobility.

What this means for institutions

Viewing settlement as a liquidity tool leads to different decisions:

• settlement speed is optimised by transaction type, not ideology

• infrastructure investment is justified by balance-sheet efficiency, not novelty

• time compression becomes a source of competitive advantage

In capital-constrained markets, the ability to reclaim hours — not basis points — increasingly defines resilience.

Conclusion: Time is Balance Sheet

Liquidity is not just about what you hold. It is about when you can use it.

As settlement becomes more precise and programmable, institutions that treat time as a first-class economic variable will carry less idle balance sheets, respond faster in stress, and operate with greater confidence.

The future of liquidity management is not faster markets everywhere, it is smarter settlement where it matters most.

Subscribe now

References

• https://www.gfma.org/wp-content/uploads/2025/08/1.-full-report-impact-of-dlt-in-cap-mkts-final-1.pdf (Impact of DLT in Capital Markets by Boston Consulting Group)

• https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/01/tokenisation-of-assets-and-distributed-ledger-technologies-in-financial-markets_be149012/40e7f217-en.pdf?utm_source=chatgpt.com (Tokenization of Assets and DLT in Financial Markets)

• https://www.iosco.org/library/pubdocs/pdf/IOSCOPD809.pdf (Tokenization of Financial Assets by International Organization of Securities Commissions)

• https://www.sec.gov/files/rules/proposed/2022/34-94196.pdf (U.S. SEC — Release No. 34-94196 (DTCC margin impact of T+1))

• https://finance.ec.europa.eu/news/t1-settlement-2025-02-14_en (European Commission — Shortening the EU Settlement Cycle (2025))

• https://www.reuters.com/markets/us/wall-street-braces-faster-trade-settlement-2024-05-28/ (Reuters: Wall Street braces for faster trade settlement (May 2024))

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with multiple awards, the VAA Art100 International Art Prize, the Collectors Art Prize | Art Legends of Our Time and the Persona Art Honours.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience, the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Why infrastructure shapes liquidity resilience, more than products

Modern capital markets are shaped less by mispricing and more by liquidity, particularly when liquidity cannot move fast enough. Repos and collateral are central to understanding this reality.

The current article argues that the next phase of market resilience will come more from upgrading the plumbing that governs settlement, margin, and intraday liquidity, where distributed ledger technology (DLT) is already delivering measurable results.

What do we mean by DLT in this context?

• In this article, DLT is not treated as a new asset class or a replacement for existing market institutions.

• It is a data and settlement framework that allows multiple parties to see the same transaction state, at the same time, with a high degree of certainty without relying on post-trade reconciliation.

• DLT enables participants to agree on the what, when and the current state of a transaction, using cryptographic verification and distributed record-keeping. This shared record becomes difficult to alter retroactively and reduces the operational frictions that arise when each party maintains its own version of the truth.

• Used selectively, this capability has important implications for settlement timing, collateral mobility, and intraday liquidity management.

What are Short-term liquidity instruments?

These are tools institutions use to manage liquidity, funding, and balance sheet over very short horizons, typically overnight to a few months. They are about cash management, not investment return.

In practice, they fall under four buckets

• Secured funding instruments - most favoured especially post-crisis such as repos, stock lending / borrowing, collateralised Commercial Papers,

• Unsecured funding instruments - less important post-crisis but still used such as Interbank loans, i.e., overnight loans, Certificate of Deposit or CDs, Commercial Paper or CPs,

• Central Bank Liquidity Tools such as standing facilities, open market operations, central bank repos

• Very short-dated instruments used as liquidity stores such as treasury bills, money market fund units.

This classification is based on economic function and reflects how the IMF, BIS, and central banks describe money markets in practice.

Repos tend to be the first focus because they are cash-driven, intraday-sensitive, and systemically visible whilst securities lending sits on the same collateral infrastructure and is a natural second-order use case once settlement and margin rails are in place.

Subscribe now

Mapping of a Security’s Lifecycle

Before focusing on repos specifically, it is worth stepping back to look at the broader securities lifecycle. The diagram below is not intended as a process walkthrough, but as a way of highlighting where time, handoffs, and operational friction quietly accumulate across execution, settlement, custody, and collateral management. These frictions — rather than asset risk — are what increasingly bind liquidity in modern markets.

Why do Repos matter in global finance?

Repos are the circulatory system of capital markets. They provide secured funding, support market-making in government bonds, enable leverage and deleverage without asset sales, and underpin margining in derivatives. When repo markets function smoothly, liquidity flows and confidence holds. When they don’t, stress propagates rapidly across asset classes.

Despite their importance, a significant proportion of repos, including overnight repos, are still governed by deferred settlement cycles. This creates a structural mismatch between how liquidity is needed intraday and how collateral actually moves operationally.

Collateral is Infrastructure

Collateral is often discussed tactically in terms of eligibility schedules, haircuts, or margin calls. Strategically, it is market infrastructure.

Across repos, securities lending, and OTC derivatives, institutions rely on collateral to:

• manage counterparty credit risk

• meet regulatory liquidity and capital requirements

• access short-term funding

• support clearing and settlement processes

Post-crisis reforms have dramatically increased the volume of collateral held across the system. Yet collateral management remains fragmented across desks, custodians, triparty agents, and clearing houses, limiting visibility and mobility precisely when speed matters most.

Where today’s repo and collateral markets fall short

Despite their scale, repo and collateral markets still suffer from structural inefficiencies that are well documented across industry studies:

• Deferred settlement (T+1 / T+2) keeps collateral stuck even for short-dated repos

• Fragmented custody and triparty chains require physical movement of collateral across multiple intermediaries

• Limited lifecycle visibility, with poor real-time insight into pledged, reusable, and unencumbered assets

• Manual margin and substitution processes, particularly in bilateral markets

• Intraday liquidity blind spots, forcing institutions to prefund buffers and over-collateralise positions

These frictions inflate balance-sheet usage, increase operational risk, and amplify stress during volatile periods rather than absorbing it.

The real opportunity of DLT in repo markets

Tokenization is often framed as a way to create new assets. In repo and collateral markets, its real value lies elsewhere.

DLT enables collateral to become:

• digitally represented with clear ownership records

• transferable with embedded settlement logic

• visible across the lifecycle in near real time

• movable intraday without relying on physical custody chains

This is not about reinventing repos. It is about upgrading how collateral moves.

On-chain Settlement: A Complementary Layer

DLT-based settlement is not intended to replace existing clearing houses, custodians, or central securities depositories. Its strength lies in acting as a complementary settlement channel for specific transaction types where precision and speed matter most.

Repos and collateral movements are particularly well-suited because they depend on:

• settlement certainty

• margin timing

• intraday liquidity availability

Targeted deployment avoids the capital inefficiencies that would arise from forcing all assets into real-time settlement.

Atomic Delivery-Vs-Payment (DvP)

Repos are conditional exchanges: cash against collateral today, reversed at maturity. Atomic DvP ensures that cash and collateral move together — or not at all.

By eliminating settlement risk and reducing fails, atomic DvP is not just an efficiency gain. It is a material risk-management improvement, particularly during periods of market stress.

Real-Time Margining and Intraday Liquidity

Margining today is largely an end-of-day construct applied to an intraday risk environment. DLT enables margin to be treated as a continuous lifecycle process:

• real-time exposure calculation

• automated variation margin calls

• intraday collateral substitution

• faster release of excess collateral

The result is freed collateral, tighter intraday liquidity management, and reduced reliance on conservative buffers.

The Repo & Collateral Lifecycle: Where DLT actually delivers value

• Traditional lifecycle (simplified) Execution → Deferred settlement (T+1 / T+2) → Collateral trapped → End-of-day margin → Delayed release at maturity

• DLT-enabled lifecycle Execution → Atomic DvP settlement → Intraday collateral reuse → Real-time margining → Automated maturity release

By compressing time, synchronising records, and automating controls, DLT shifts collateral from a static regulatory buffer into an actively managed liquidity resource.

Evidence from live market infrastructure

These outcomes are already visible in production:

• Industry analysis consistently identifies repos and OTC derivatives as priority candidates for DLT adoption due to their reliance on collateral mobility and margin precision.

• Deferred settlement is shown to trap collateral and inflate liquidity buffers, even for overnight funding.

• Shared-ledger models act as a golden source for trade and collateral status, reducing reconciliation breaks and operational bottlenecks.

• Production platforms such as J.P. Morgan’s intraday repo infrastructure and Broadridge’s Distributed Ledger Repo demonstrate atomic DvP, near-zero settlement fails, and repo transactions measured in hours rather than days — while operating within existing triparty, custody, and legal frameworks.

• Books-and-records models such as HQLAx show how collateral substitutions and transformations happen instantly without moving securities through traditional custody chains.

What this means for Institutions

• DLT delivers the most value when deployed as infrastructure, not as a product overlay

• The largest gains come from time compression, visibility, and automation, not new asset formats

• Infrastructure-first adoption improves balance-sheet efficiency without changing underlying risk profiles

Repos and collateral are key to building liquidity resilience and this is where the next phase of market evolution is already shaping up.

Subscribe now

Reference

• https://www.gfma.org/wp-content/uploads/2025/08/1.-full-report-impact-of-dlt-in-cap-mkts-final-1.pdf (Impact of DLT in Capital Markets by Boston Consulting Group)

• https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/01/tokenisation-of-assets-and-distributed-ledger-technologies-in-financial-markets_be149012/40e7f217-en.pdf?utm_source=chatgpt.com (Tokenization of Assets and DLT in Financial Markets)

• https://www.iosco.org/library/pubdocs/pdf/IOSCOPD809.pdf (Tokenization of Financial Assets by International Organization of Securities Commissions)

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m a multi-award winning abstract textured artist known for my unique palette knife technique. Listed as a Bestseller on Singulart, a France-based renowned online art gallery.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with multiple awards, the VAA Art100 International Art Prize, the Collectors Art Prize | Art Legends of Our Time and the Persona Art Honours.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience, the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Part II looks under the hood. If Part I explored what clients need, this section unpacks how those needs translate into real infrastructure — the standards, architecture, compliance rails, and design choices that determine whether tokenization can scale inside institutions.

What comes through in these conversations is how much intentional engineering sits behind the scenes. From omnichain standards like ERC-7208 to hybrid chain setups to programmable compliance, every layer of the stack has to work together for institutions to trust it. And beyond the tech, there is the regulatory and operational reality: issuers navigating jurisdictions, compliance teams seeking predictability, and risk officers demanding auditability.

Part II covers

3. Tokenization Infrastructure & Architecture: Q8-Q11 (focus on which part of Tokenization value chain, interoperability & multichain deployment, client preference regarding public / private / hybrid chains, compliance

4. Regulation & Institutional Constraints: Q12-Q14 (most common regulatory uncertainty affecting client needs, biggest compliance blocker affecting adoption, navigating clients through jurisdiction specific rules)

5. Adoption trends & future outlook: Q15-18 (what triggers a client move from exploration to production deployment, which sectors are moving fast towards adoption, what does a client success look like, biggest opportunity for tokenization in the next 24 months)

This part is a look at how Evergon Labs approaches those constraints — and how the broader market is evolving as tokenized assets move from pilots to production.

Tokenization Infrastructure & Architecture

Q8 What part of the tokenization value chain do Evergon and Nexera focus on most?

The architecture is structured across three complementary layers, each designed to solve a different part of the tokenization lifecycle.

At the foundation lies the Nexera infrastructure, which provides the full protocol layer for all smart-contract logic. This includes issuance, lifecycle management, compliance enforcement, and asset transformation. Nexera’s protocol , and specifically our Nexera Standard, ERC-7208 , is the backbone that standardizes assets, ensures state integrity, and makes tokenization programmable at the deepest level. ERC-7208 is more than a token standard; it is a universal tokenization framework capable of wrapping any asset, fractionalizing it, and managing its lifecycle across chains.

Above this, Evergon provides an enterprise-grade abstraction layer through its APIs and SDKs. This is essential for institutions, because no large organization is rebuilding its existing back-office systems. These legacy systems cost hundreds of millions to build and operate. Evergon enables tokenization to integrate natively into those existing workflows without requiring blockchain expertise. Institutions can issue assets, distribute fractions, and manage compliance through APIs, while their internal infrastructure remains unchanged.

The third layer is the Evergon white-label platform, which integrates all API capabilities into a fully operational no-code interface. It enables clients to launch compliant issuances, manage distribution, configure lifecycle events, and operate a complete tokenization business in minutes, with zero engineering effort.

Together, this three-layer architecture covers the entire value chain: smart-contract infrastructure, enterprise abstraction, front-end orchestration, compliance, distribution, and secondary markets.

Q9 How do you approach interoperability and support for multi-chain deployment?

Interoperability is built natively into the Nexera protocol, especially through ERC-7208. The standard is omnichain by construction, because ERC-7208 is built directly on top of LayerZero’s messaging infrastructure. This gives institutions the assurance that any asset deployed with ERC-7208 benefits from LayerZero’s proven security model for cross-chain messaging and state synchronization.

This omnichain model does not rely on bridges, wrapped representations, or duplicated smart contracts. Instead, a single canonical asset can exist across multiple networks using standardized cross-chain state, coordinated by LayerZero. This eliminates one of the biggest institutional concerns: asset fragmentation across chains.

Just as importantly, ERC-7208 also enables interoperability between token standards. It acts as a universal adapter that can encapsulate ERC-20, ERC-721, ERC-1155, ERC-1400, ERC-3643, and future standards. This ensures that assets created today remain portable, composable, and future-proof as the market evolves.

Evergon extends this interoperability to legacy systems through our API layer. Institutions issue on one chain, distribute on another, manage compliance across all chains, and maintain a unified operational view. For them, interoperability means not only across blockchains, but also across systems , blockchain and non-blockchain alike.

Q10 Are clients leaning more toward public chains, private chains, or hybrid models? What drives this preference?

The majority of institutional interest today is oriented around public chains. Public networks offer global distribution, composability, and liquidity potential. When paired with programmable compliance , enforced directly through ERC-7208 and LayerZero , they become viable even for highly regulated entities.

Private chains remain relevant primarily for large institutions that maintain internal settlement or collateral systems. The emerging model is hybrid: underlying collateral or sensitive data is recorded on a private chain, while fractions circulate on a public chain under strict compliance gating.

This hybrid architecture allows institutions to maintain sovereignty and operational control, while benefiting from the liquidity and transparency advantages of public chains.

Q11 How does Evergon handle compliance across this multi-layer system?

Compliance is fully in-house in terms of orchestration, aggregation, and operational workflows. But we integrate best-in-class providers across every aspect of AML and identity verification: KYC, KYB, KYT, sanctions, wallet screening, fraud detection, transaction monitoring, and risk scoring. These providers collectively serve millions of users, and Evergon brings them together into a unified compliance engine.

All these signals , identity, behavior, risk, AML , are consolidated into an institutional-grade dashboard where administrators can configure rules, thresholds, and workflows. These checks can run off-chain, but they can also be enforced on-chain using ERC-7208’s compliance hooks. This enables embedded supervision and automated, programmable compliance where transaction permissions, asset access, and lifecycle events are enforced directly at the protocol level.

In practice, this means institutions can codify jurisdiction-specific rules, investor eligibility, AML constraints, and risk policies directly into the asset or the distribution rules. Compliance becomes proactive rather than reactive, and it scales globally without increasing operational burden.

Subscribe now

Regulation & Institutional Constraints

Q12 What regulatory uncertainties come up most often in conversations with clients?

Most clients we speak with do not come with strong legal experience in tokenization or digital securities. They understand that compliance is important, but they rarely know where to begin when it comes to structuring an issuance, choosing the right jurisdiction, or understanding the operational implications of their regulatory choices.

This is where we bring a lot of value. Beyond providing technology, we share our direct experience from real deployments , what structures have worked, which ones have failed, and which jurisdictions are typically best suited for specific asset types or business models. We do not provide legal advice, but we offer guidance shaped by what we have seen in practice, which helps clients avoid common mistakes.

Many clients need clarity on fundamental questions.

• Where should the issuance entity be located?

• What jurisdiction aligns best with the underlying asset or the investor base?

• How should custodial relationships be structured?

• How will they be able to scale distribution globally without violating marketing rules, investor eligibility requirements, or cross-border restrictions?

For the vast majority, this is new territory. They rely on us to help them navigate the setup, understand what is feasible operationally, and determine which approach will be sustainable if they scale internationally.

In short: clients don’t struggle with “regulation” as a concept; they struggle with designing a structure that actually works in the real world. That’s where our experience becomes critical.

Q13 In your view, what is the biggest compliance blocker preventing institutional-scale adoption today?

The biggest blocker remains operational compliance maturity. Clients do not struggle with understanding regulations on paper; they struggle with implementing those regulations in a scalable and systematic way.

Traditional infrastructures rely on manual verification, fragmented tools, and human oversight. But tokenization requires something different: compliance must be deterministic, automated, and enforceable across the entire asset lifecycle. Eligibility checks, AML constraints, investor categorization, transaction restrictions, sanctions screening, and ongoing monitoring all need to happen automatically, not as isolated, manual processes.

This is why programmable and embedded compliance becomes critical. Compliance must be integrated directly into the infrastructure, not treated as a separate layer. When rules are enforced pre-access and pre-transaction, clients gain the level of consistency, auditability, and predictability they need to operate at scale.

What accelerates adoption is when clients see that compliance is no longer an operational burden. It becomes part of the architecture: automatic, reliable, and constantly enforced without manual intervention. That is the shift institutions have been waiting for.

Q14 How do Evergon and Nexera help clients navigate jurisdiction-specific rules and constraints?

We make it clear to every client that we do not provide legal advice. However, most clients , whether they are startups, established companies, or domain experts entering the tokenization space , do not have deep legal or structural experience. They rely heavily on our real-world knowledge to understand which setups work in practice, which jurisdictions align with their asset type, and how to structure their issuance in a way that can scale internationally.

Our value comes from experience. We have seen what succeeds, what fails, and why. We help clients avoid common architectural mistakes and design a structure that is operationally viable before they engage with their legal partners. Once the legal framework is defined, Evergon turns it into something actionable, enforceable, and automated.

This is where our compliance layer becomes indispensable. Every jurisdiction-specific rule , whether related to AML, investor eligibility, residency restrictions, sanctions, documentation requirements, onboarding flows, or cross-border limitations , can be encoded into our system without writing a single line of code.

Evergon includes a powerful no-code workflow builder that lets clients create both simple and extremely sophisticated compliance processes. These workflows can incorporate identity checks, KYB/AML rules, risk scoring, behavioral triggers, investor categorization, sanctions lists, transaction monitoring, and conditional logic based on any data point captured in the onboarding or transactional lifecycle.

The workflows operate across two layers:

• Off-chain enforcement, which covers identity verification, AML/KYC/KYB, risk scoring, document validation, jurisdiction constraints, and multi-step compliance procedures.

• On-chain enforcement, where access rules, asset transfer permissions, residency filters, transaction restrictions, and investor category gates are automatically enforced at the infrastructure level. The system prevents non-compliant actions before they occur, creating deterministic, audit-ready compliance.

This combination , jurisdiction-aware workflows, no-code configuration, and dual-layer enforcement , gives clients something they cannot find anywhere else: compliance that is truly embedded into the lifecycle of the asset, automatically applied, continuously verifiable, and scalable across all markets.

We don’t replace legal teams; we make their decisions executable.

We don’t replace regulation; we operationalize it.

And we don’t introduce additional complexity; we remove it.

This is why clients trust us: we provide not only the infrastructure, but the practical expertise needed to turn a legal framework into a system that works reliably in the real world.

Adoption Trends & Future Outlook

Q15 What triggers a client to move from exploration → POC → production deployment?

There are usually three concrete triggers.

First, the operational reality hits. During a POC, clients see what it means to have investors onboard in minutes instead of days, to remove manual reconciliation, and to automate distributions, redemptions, and eligibility checks. When they realise that tokenization is not “a Web3 experiment” but a way to industrialise their back and middle office, the conversation changes from “let us test this” to “we cannot go back to the old way.”

Second, they get a clearer view on capital formation. Once compliance is embedded and onboarding is global by design, they understand that tokenization is the most pragmatic way to access a broader investor base: internationally, across ticket sizes, and with much more flexible structuring. They see that tokenization does not manufacture liquidity, but removes the operational and jurisdictional frictions that previously blocked it.

Third, internal confidence stabilises. Legal, risk, and operations teams need to see that the infrastructure is not improvised. When they see that workflows are configurable, compliance is programmable, and lifecycle behaviour is deterministic rather than discretionary, they become comfortable moving to production. At that point, tokenization stops being “innovation theatre” and becomes core infrastructure.

Q16 Which sectors are moving the fastest in real-world adoption right now?

From our vantage point, three segments stand out.

The first is commodities, especially precious metals and resource-based products. They are global by nature and already depend on custody, certification, and inventory management, so tokenization is a natural extension. We see a strong alignment between the way these markets already work and what programmable assets can offer.

The second is fixed income and cash-like products. Tokenized treasuries have already passed several billions in assets under management and are growing quickly, reflecting a broader institutional movement towards on-chain fixed income and money market style products.

The third is private credit and structured credit. Reports from major analytical and ratings firms highlight tokenized private credit as one of the most active and promising RWA verticals, precisely because credit structures benefit the most from transparency, automation, and global distribution.

Real estate remains a very strong use case as well, especially income-generating or professionally managed real estate where cash flows and rights can be structured and distributed very clearly.

Q17 What does “success” look like for clients after implementing tokenization with Evergon and Nexera?

Success is not a vague feeling; it shows up in measurable numbers.

Onboarding time for investors moves from days or weeks to minutes. Compliance teams see fewer manual interventions, because eligibility, sanctions screening, and risk rules are enforced automatically during onboarding and before transactions. Operational teams spend less time on reconciliation, document chasing, and manual lifecycle events, because these are expressed as rules and workflows instead of tasks.

Fundraises become more predictable. Because the infrastructure supports smaller tickets, cross-border participation, and programmatic distributions, clients can access both institutional and qualified individual investors on the same rails. That does not guarantee oversubscription, but it makes capital formation structurally easier and more repeatable.

On the secondary side, success means that transfers and liquidity events happen inside a controlled environment, with full compliance, proper audit trails, and continuous alignment with regulatory constraints. There is no “shadow layer” of Excel tracking what the blockchain is doing; the blockchain and the operational system are the same source of truth.

Ultimately, success is when clients stop talking about “tokenization” and start talking only about their product, their investors, and their performance. The infrastructure becomes invisible, which is exactly the point.

Q18 Over the next 12–24 months, where do you see the biggest opportunity for tokenization to scale?

The next big opportunity is not only more issuances. It is the emergence of a full risk and information stack for tokenized assets, very close to what exists for traditional credit and securitisation.

Today, the RWA space still lacks the on-chain equivalent of what rating agencies, credit models, and risk analytics provide in traditional markets: things like probability of default, loss given default, exposure at default, and scenario-based stress testing on portfolios. Some early moves are happening, with large ratings firms experimenting with ratings for tokenized structures and on-chain protocols, and research into on-chain credit risk scoring and behaviour-based risk metrics. But this is still very early.

For tokenization to scale at institutional depth, three layers must emerge and mature.

First, asset and collateral data. Markets need continuous, structured, and standardised information about the underlying collateral, whether it is real estate, receivables, commodities, or private credit. This includes performance, occupancy, delinquency, concentration, seniority, and all the elements that underlie modern credit analysis.

Second, risk and rating infrastructure. We need actors and systems that can transform raw data into credit views: ratings, probabilities of default, scenario loss distributions, correlation analysis, and portfolio-level risk metrics. These may be traditional rating agencies extending their models on-chain or new specialised credit analytics providers focused on RWAs.

Third, integration of that risk intelligence into the tokenization infrastructure. It is not enough to publish a rating report. Risk data needs to be available to the platforms that manage lifecycle events, to the workflows that handle margin calls or covenants, and to the investors who allocate capital. The real power appears when default probabilities, rating changes, or deterioration signals can trigger programmable workflows: tightening of eligibility rules, adjustment of limits, or changes in distribution policies.

The biggest opportunity for Evergon and Nexera in this context is to act as the infrastructure where all of this can plug in: a place where assets are standardized, compliance is embedded, and risk signals can be connected directly to the operational logic. As more credit and rating infrastructure appears around RWAs, the platforms that can ingest, structure, and act on that information will become the central nervous system of this new market.

In short, the next wave is not just about putting more assets on-chain. It is about giving those assets the same risk intelligence, rating sophistication, and credit tooling that institutional investors already rely on in traditional markets – but with more transparency and more automation. That is when tokenization truly scales.

Subscribe now

Conclusion

As this second part shows, tokenization is quickly moving into its “infrastructure phase.” The conversations are shifting away from experimentation and toward questions of interoperability, sovereignty, compliance enforcement, and long-term scalability. Institutions are no longer asking whether tokenization is useful; they’re asking how to make it work within the systems they already operate.

The future of this market will be shaped by platforms that can bring all of this together — technology that is flexible, compliant by design, and capable of integrating risk intelligence as the ecosystem matures. When that happens, tokenization will stop being a separate topic altogether. It will simply become the standard way assets move, settle, and interact with global capital.

These two parts together offer a grounded, inside-out view of where the industry is today — and where the next wave of institutional adoption is heading.

References

• https://www.coindesk.com/opinion/2025/02/07/rwa-tokenization-is-going-to-trillions-much-faster-than-you-think

• https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf

• For Q&A, answers as provided by Tristan Bochu, Senior Product Marketing Manager, Evergon Labs

Bios

Evergon Labs is a tokenization toolbox with embedded compliance, allowing any investment firm to go-to-market in minutes.

Nexera is the foundation behind Evergon Labs. It is the umbrella of an entire ecosystem bringing modern finance on-chain.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Tokenization is often discussed through frameworks and forecasts, but the real story sits in everyday conversations with the people trying to build and adopt it. Part I of this Q&A steps into that world — the honest questions clients ask, the misconceptions that still hold them back, and the patterns that keep showing up across sectors.

What stood out most in these discussions is how consistent institutional needs have become. Whether it’s a boutique investment firm, a supply-chain platform, or a large fund, they all want the same thing: clarity, integrated compliance, and technology that doesn’t force them to rebuild internal processes from scratch. Tokenization only works when it fades into the background and simply feels like better infrastructure.

Part I covers

1. Market Needs & Client Insights: Q1-Q4 (biggest pain points institutions face, client needs and how they differ, popular asset classes, client misconceptions about tokenization)

2. Product-Market Fit & Internal Feedback: Q5-Q7 (how client feedback enters product development cycle, patterns and themes uncovered from client conversations, case study of useful client feedback)

This first part looks at those market signals up close, the feedback loops, the operational realities, and the themes that ultimately shape Evergon Labs’ product decisions. It’s a grounded look at what actually matters when institutions move from curiosity to action.

Subscribe now

Market Needs & Client Insights

Q1 Based on your client conversations, what are the biggest pain points institutions face when evaluating tokenization solutions today?

The first and most persistent pain point is compliance. Institutions want a solution where compliance is not an external add-on but a deeply integrated part of the infrastructure. They are already overwhelmed by vendors, dashboards, and systems they must maintain. Adding yet another third-party compliance provider is simply not an option. They expect a unified workflow where KYC, KYB, AML, and transaction monitoring are embedded directly into the operational lifecycle of their assets.

The second area is clarity. Institutions need a clear picture of the full tokenization process. Many underestimate the complexity of going from issuance to distribution to secondary markets. These are three separate motions, each with its own regulatory and operational requirements. What clients want is a fully abstracted, end-to-end experience that removes the burden of orchestrating multiple vendors.

Sovereignty has become a major topic in 2024–2025. Large institutions now think beyond “how do I issue a token?” and instead ask, “how do I retain control over my assets, data, operational flows, and compliance logic over the next decade?” They want infrastructure that does not trap them in someone else’s ecosystem, that can scale with their business, and that they can run autonomously if needed.

Interoperability is another critical point, and we see it misunderstood in the market. Institutions are not only concerned about interoperability across blockchains. What they really care about is interoperability with their existing legacy systems, which cost billions to build and cannot be replaced. No major fund administrator is rebuilding their back-office. Tokenization must connect to those systems, not compete with them. This is why we built a full API and SDK layer at Evergon , to make tokenization natively compatible with legacy infrastructure and existing operational workflows.

Finally, liquidity is always a conversation. Many clients knock on the door hoping tokenization alone will bring investors. We consistently educate them that tokenization is a modern form of securitization, not a liquidity engine. It enables liquidity, but it does not manufacture it. The value comes from access, not magic.

Q2 What types of clients approach Evergon and Nexera most frequently, and how do their needs differ?

There are generally three profiles.

The first group is emerging investment boutiques or newly formed companies launched by domain experts, often in real estate, commodities, or alternative assets. These founders have deep expertise but want to go to market quickly with a regulated, institutional-grade offering. For them, time-to-market and a strong compliance foundation matter more than deep technical customization.

The second group is companies that already have a product , for example, invoice financing platforms, supply-chain players, or commodity trading desks , and want to leverage tokenization as a new revenue line. They usually prefer our APIs and SDKs so they can integrate tokenization directly into their existing systems without changing their internal workflows.

The third group is what we call the “big boys”: large funds, banks, and institutional players. Their focus is sovereign infrastructure, interoperability with legacy systems, and long-term scalability. They want a framework they can control, extend, and align with internal compliance and risk controls. For them, Evergon and Nexera become the technology backbone rather than a front-end product.

Q3 Which asset classes are clients most actively exploring for tokenization in 2025, and why?

The strongest demand comes from real estate and commodities. Precious metals in particular saw explosive interest this year. These are asset classes where tokenization adds immediate operational and distribution value: faster settlement, improved record-keeping, expanded global investor access, and fractionalized distribution.

We also see growing momentum in supply-chain assets, logistics contracts, and other operational cash-flow assets that were rarely discussed a few years ago. Many of these represent billions in locked value and can benefit significantly from fractionalization and programmable lifecycle management.

Tokenized stocks remain part of the conversation, but that reflects general market trends rather than specific demand spikes.

Q4 What misconceptions do enterprise clients still have about tokenization?

Our institutional clients tend to be well-educated, but the broader market still carries two major misconceptions.

The first is the idea that tokenization creates liquidity. It does not. It only makes liquidity possible by removing operational friction and expanding distribution globally. Liquidity still comes from investor demand.

The second is that tokenization ends with the token. We consistently explain that the real power is in making these tokens useful: turning them into collateral, enabling lending, enabling programmable cash flows, and making them dynamically integrated into DeFi-like mechanisms , even if the client does not identify as “DeFi.” A static tokenized asset is only half of the story.

Product-Market Fit & Internal Feedback

Q5 How does Evergon and Nexera incorporate client feedback into the product development cycle?

Our product team is embedded directly into every client’s tokenization project from the very beginning. For most deployments, we operate with daily sync calls between the client and our product and engineering teams. Clients see the product evolve in real time, and their feedback shapes each iteration of flows, dashboards, and operational tools.

This close collaboration allows us to capture precise operational needs , the kind that rarely appear in RFPs or pitch decks , and translate them into the product with a high level of detail.

Q6 What patterns or themes do you see in client requirements when shaping the roadmap?

The first recurring theme is investor experience. Almost every client prioritizes this above their own administrative workflows. They want investors to onboard in minutes, not days, and to have a frictionless subscription and redemption experience.

The second theme is the scaling sequence institutions go through. It normally follows a predictable path. They begin with a simple pilot to tokenize a single asset. Once they build confidence, they extend to multiple assets. Then they open the platform to additional issuers. The final stage is launching an on-chain fund that invests programmatically across all tokenized assets in the market.

We designed the entire Evergon infrastructure to support this evolution. Even so, client requests continually refine how we handle edge cases, role permissions, reporting layers, and asset lifecycle orchestration.

Q7 Can you share an example where client input led to a meaningful product enhancement or shift in priorities?

Cireta has been one of our most impactful contributors. Their team provided feedback spanning asset flows, lifecycle edge cases, administrative operations, and investor onboarding UX. It has been an exceptional collaboration and helped us refine our workflows to an institutional level of precision.

Conclusion

If there’s one thread running through all of Part I, it’s this: institutions aren’t looking for “Web3 solutions”; they’re looking for tools that make their businesses run better. When compliance becomes embedded, onboarding becomes smoother, and workflows become automated, tokenization shifts from an experiment to an operational advantage.

The insights here make it clear that product–market fit in tokenization isn’t driven by hype — it’s shaped by the everyday frictions clients face and the infrastructure that removes them. As the market matures, the platforms that make tokenization feel simple, reliable, and invisible will ultimately win.

Part II takes this forward and explores the architecture, compliance models, and regulatory realities that make that level of simplicity possible.

Subscribe now

References

• https://www.coindesk.com/opinion/2025/02/07/rwa-tokenization-is-going-to-trillions-much-faster-than-you-think

• https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf

• For Q&A, answers as provided by Tristan Bochu, Senior Product Marketing Manager, Evergon Labs

Bios

Evergon Labs is a tokenization toolbox with embedded compliance, allowing any investment firm to go-to-market in minutes.

Nexera is the foundation behind Evergon Labs. It is the umbrella of an entire ecosystem bringing modern finance on-chain.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Strategic Roadmap for Banks Entering Tokenization

As tokenization evolves into a foundational layer of financial market infrastructure, traditional financial institutions (FIs) must shift from innovation pilots to scalable implementation. In 2026, the winning institutions will not be the fastest experimenters, but those able to operationalize tokenization into existing workflows for custody, settlement, reporting, and risk. This requires a structured roadmap that reflects institutional realities.

The first strategic choice for FIs is selecting an entry model.

Four institutional pathways are emerging.

1. Native Issuance Infrastructure: Internal tokenization rails used for tokenized deposits, tokenized funds, and digitized bonds (e.g., JPM Onyx, HSBC Orion). This model suits large banks with significant technology budgets and control requirements.

2. Partnership-Led Tokenization: Where FIs leverage platforms for issuance, registry, compliance, audit, and smart-contract governance. This reduces build cost and accelerates time-to-market.

3. Custody-First Model: Establishing MPC wallet infrastructure while partnering on issuance, trading, and secondary markets. This is the dominant model for banks entering digital assets.

4. Marketplace Positioning: Enabling clients to access tokenized assets via curated, regulated marketplaces.

Once institutions choose their tokenization entry model, the next—and most critical—step is building the right custody and settlement foundation. This layer determines whether tokenization remains a series of isolated pilots or becomes a scalable institutional capability.

Subscribe now

Custody Architecture Is the New Institutional Infrastructure

In digital markets, custody is not only about safekeeping assets—it becomes the backbone of identity, access control, compliance, and transaction authorization.

Traditional custody models cannot simply be “ported” onto digital assets. Banks must invest in a digital-native custody stack with five essential components:

a. MPC Wallet Governance (Multi-Party Computation)

• Eliminates single points of failure.

• Enables institutional-grade governance: multi-sig, quorum-based approvals, and role-specific permissions.

• Supports fine-grained policy enforcement directly at the wallet layer.

b. Segregated Account Structures

Tokenization introduces the need for:

• segregated on-chain sub-accounts,

• programmable entitlements,

• institutional whitelists and restricted flows.

Segregation is essential for asset servicing, investor protection, and regulatory clarity.

c. Auditable Access Control

Institutions must maintain tamper-proof access logs, permissioned signing policies, operational risk oversight and four-eyes/six-eyes controls embedded in smart contracts. This recreates the governance of traditional systems — but with higher transparency.

d. Programmable Compliance Policies

Compliance moves from external checks to embedded logic. Tokens can enforce jurisdictional restrictions, AML/KYC/KYB eligibility, investor categorisation, transfer rules and lock-ups and sanctions screening triggers. This is why custody = policy + identity, not just storage.

e. Integration with Core Banking Systems

Digital custody must connect into treasury systems, general ledger, risk engines, compliance systems, collateral management, settlement operations.

Without this, tokenization remains a silo. It is no surprise that the BIS Innovation Hub repeatedly identifies custody as the primary bottleneck slowing institutional adoption — institutions cannot scale tokenization until custody stacks evolve to match regulatory and operational expectations.

Settlement Workflows Must Be Redefined for Tokenized Markets

Tokenization does not only digitize assets — it compresses time, rewrites settlement logic, and transforms liquidity management.

From T+2 → Atomic T+0 (DvP-PvP), migrating to atomic settlement unlocks three powerful outcomes:

a. Reduced Counterparty Exposure

The settlement window shrinks from days to seconds, lowering CCR and CVA capital requirements.

b. Collateral Mobility

Collateral moves instantly, reducing buffers and unlocking idle capital.

c. Intraday Liquidity Efficiency

Programmable settlement enables intraday repo, real-time FX, on-demand liquidity swaps, and automated treasury optimization.

Both MAS Ubin+ and Project Guardian show clear evidence that programmable settlement can reshape cross-border payments, FX settlement, repo and securities lending, liquidity distribution and collateral transformation. These are core banking functions, not “crypto use cases.”

Operating Models Must Be Rebuilt, Not Adjusted

To scale tokenization beyond pilots, banks must redesign their operating models across four layers:

a. Front Office

• New distribution channels for tokenized products

• Real-time execution workflows

• Portfolio tools incorporating tokenized MMFs, credit, and bonds

b. Middle Office

• Real-time collateral monitoring

• Automated compliance checks

• Smart contract audit and governance processes

c. Back Office

• Reconciliation-free environments

• Automated corporate actions

• Token registry management

• New settlement routing logic

d. Risk, Finance & Compliance

• Updated CCR/CVA models for atomic settlement

• Policy-based controls and real-time AML

• New valuation and accounting processes

• New internal controls for custody and access

Tokenization succeeds when technology, operations, risk, and compliance move together. Pilots often isolate the tech; scaling requires transforming the institution.

A practical roadmap includes:

• Governance: cross-disciplinary tokenization steering committees

• Infrastructure: custody + issuance + compliance stack

• Data: on-chain analytics for reporting, audit, and risk

• Operations: workflows for KYC, eligibility, tax, corporate actions

• Business case: treasury, collateral, private markets, and funds

Tokenization is an institutional reinvention of capital markets infrastructure. Banks that align strategy with operational readiness will define the next decade of digital finance.

Subscribe now

References

• https://www.bis.org/cpmi/publ/d225.pdf

• https://www.newyorkfed.org/newsevents/news/financial-services-and-infrastructure/2023/20230518

• https://reports.weforum.org/docs/WEF_Asset_Tokenization_in_Financial_Markets_2025.pdf

• https://www.icmagroup.org/fintech-and-digitalisation/fintech-resources/tracker-of-new-fintech-applications-in-bond-markets/

• https://www.bis.org/cpmi/publ/d225.pdf

• https://www.mas.gov.sg/schemes-and-initiatives/ubin-plus

• https://www.business.hsbc.com/en-gb/insights/financing/first-multi-currency-digital-bond-offering

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Why Banks Pilot Tokenization but Don’t Fully Adopt It Yet?

Banks have run dozens of successful pilots — digital bonds, tokenized repos, intraday settlement, tokenized deposits — yet full adoption remains slow and fragmented. This isn’t because tokenization doesn’t work. It’s because institutional adoption has a completely different risk, cost, and regulatory threshold than running a pilot.

Pilots prove technology — NOT commercial, regulatory, or ecosystem readiness

IOSCO explicitly says: “Tokenization is growing but remains nascent… adoption is still limited. Interoperability challenges and the lack of credible settlement assets hinder scalability.”

A pilot only tests how a single bank issues a single instrument on a controlled network. But scaling requires multiple dealers, investors, custodians, CSDs, regulators, settlement assets (CBDC or tokenized deposits).

This ecosystem effect is the #1 blocker. A single pilot = a demo. Market-wide adoption = infrastructure change.

No liquidity, “Islands of DLT” imply no market to trade into.

The IOSCO Report states, “Concerns around the lack of interoperable initiatives forming ‘islands of liquidity’…issuers are unclear how to reach their target investor base.”

The killer problem is that whilst banks can issue a tokenized bond, they can’t trade, distribute or custody it across multiple venues. A lack of secondary market translates to ‘no adoption’. This lack of investor access further translates into ‘no point issuing at scale’.

Regulatory uncertainty + legal opacity = cannot run a P&L business

The IOSCO Report states: “To encourage widescale adoption, there must be legal certainty that the digital security legally qualifies as the asset… and clarity on settlement finality, ownership, and insolvency treatment.”

Subscribe now

Banks cannot scale tokenization without answers to:

• When is settlement final?

• Does the token legally represent the bond?

• What happens in insolvency?

• How do CSDR/MiFID/SEC rules apply on-chain?

• Are validator nodes accidentally “clearing agencies”? (SEC concern)

“DLT-based Securities remain thinly traded overall and relatively illiquid… issuer and investor demand is limited.”

Regulation is the number one gating factor. Pilots do not require solving these issues. However, scaling does.

Technology cannot yet support large-scale regulated markets

The report states, “Scalability… remains an open question. Can networks reach the required large-scale throughput of existing market infrastructure?”

Private chains do not scale. Public chains don’t meet settlement-finality or privacy requirements. Interoperability layers are immature. Banks cannot move trillions on tech that is still evolving.

Massive operational change, unclear roles for custodians, Central Securities Depository (CSDs), Central Counterparty (CCPs).

The report says: “Given the level of change that DLT may deliver… industry participants should align on the roles of CSD, CCP, and custodians, given the overlap.”

Tokenization disrupts entire market structure:

• What happens to Euroclear/Clearstream?

• Who acts as the record of truth?

• Where does the CCP sit?

• How do banks handle key management, MPC wallets, validator governance?

Until roles are clarified, no bank will scale beyond pilots.

No industry coordination: Global Financial Markets Association (GFMA) says banks are moving alone, not together

The IOSCO report highlights, “Use cases have been experimental… there is a danger they fail to mobilize coordinated outcomes required to establish a DLT-based ecosystem.”

Banks built JPM Onyx, HSBC Orion, Goldman GS DAP, BNP Digital Asset Platform, SDX, MarketNode and Broadridge, but none interconnect.

As a consequence, pilots don’t scale.

Ambiguity in Commercial Angle

Today banks earn fees from custody, CSD flows, settlement, FX + intraday liquidity, underwriting spreads, collateral transformation.

Tokenization collapses settlement cycles, reduces intermediaries, reduces CSD reliance, reduces collateral locked in pipes, automates corporate actions and makes repo intraday and continuous.

Given the challenges around interoperability and regulatory clarity remains, although banks want efficiency, they are unable to industrialize and scale as they tend to lose their current fees without being able to realise the full benefits of Tokenization.

Subscribe now

Conclusion:

“Tokenization pilots prove that the technology works. Scaling requires regulatory clarity, settlement assets, market-wide interoperability, liquidity, and a viable commercial model — none of which fully exist yet.”

References

• https://www.iosco.org/news/pdf/IOSCONEWS778.pdf?v=4

• https://www.bis.org/cpmi/publ/d225.pdf

• https://www.newyorkfed.org/newsevents/news/financial-services-and-infrastructure/2023/20230518

• https://reports.weforum.org/docs/WEF_Asset_Tokenization_in_Financial_Markets_2025.pdf

• https://www.icmagroup.org/fintech-and-digitalisation/fintech-resources/tracker-of-new-fintech-applications-in-bond-markets/

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Model Design is Foundation

As tokenization evolves from buzzword to business model, one truth is becoming clear: technology alone doesn’t define success — the underlying economic structure does.

Fractional real estate is often presented as a gateway to asset tokenization — yet the market is still experimenting with models that balance accessibility, compliance, and scalability.

In this article, Gregory Brenig, Founder of Block Tech, breaks down the three dominant models in real estate crowdfunding — Loan, Equity, and Royalty-based — and why choosing the right structure matters more than ever in determining who will scale sustainably when tokenization fully takes off.

His insights highlight a crucial inflection point: while tokenization may be the future, model design is the foundation.

Q1 What is fractional real estate, and why has it become popular in recent years?

Fractional real estate allows investors to buy into properties without owning the entire asset. With as little as €10, anyone can participate. Technology has democratized access and removed the complexity of traditional ownership. It’s a response to rising real estate prices and the growing desire for passive income through property.

Q2 What are the 3 main crowdfunding models used in real estate?

Real estate crowdfunding generally follows three models:

• Loan-based: investors lend money to developers in return for interest.

• Equity-based: investors buy shares in an SPV that owns the property.

• Royalty-based: investors receive a share of the property’s revenue (rents), without owning shares or debt. BlockTech uses the royalty model.

Subscribe now

Q3 How does the loan model work, and what are its risks?

Loan-based crowdfunding platforms lend investor money to a developer or operator and promise a fixed return. The platform is exposed to default risk. If the project doesn’t perform, it must still pay investors. In volatile markets, this often leads to collapses. We’re seeing this already in 2025 and expect more in 2026. It’s fundamentally a credit risk product.

Q4 What about the equity model — how does it operate?

Equity models involve investing in a company (usually an SPV) that owns the property. Investors receive dividends and may profit from capital gains. However, it is highly regulated under financial authorities (MiFID II, ECSPR), costly to set up, and slow to scale. Investors hold equity — but not direct access to rents.

Q5 What is the royalty-based model and how does it differ?

In the royalty model, investors buy contractual rights to a property’s revenue — usually rental income. There is no equity, no debt, and no financial instrument. It’s simple: if the property earns, investors earn. If not, there’s no payout — but no platform collapse either. It’s pure alignment with performance, and it avoids financial regulation while remaining fully legal under real estate law.

Q6 Why did you, as the founder of BlockTech, choose royalties over the other models?

After deep analysis, I concluded that royalties are the most sustainable and stable economic model. Equity and loan platforms fail when markets shift. Royalties do not promise returns — they distribute real revenue. It’s not speculation; it’s performance-based. That’s why at BlockTech, we designed the entire platform around royalties, regulated through real estate licenses.

Q7 Is the royalty model legally sound without financial regulation?

Yes, because it’s not a financial product. At BlockTech, our model operates under real estate law. Each platform must have a real estate license, civil liability insurance, and financial guarantee insurance. It’s contract law, not securities law - making it both compliant and much more agile.

Q8 What about investor trust? Which model builds the most confidence?

Royalties are the most intuitive: investors receive monthly rental income. No crypto. No shares. No hidden structures. Just a transparent link between the property and the investor’s return. Trust is built through simplicity, verified data, and performance. That’s what we offer at BlockTech.

Q9 Could royalties and tokenization co-exist in the future?

Yes, tokenization is just a tech layer. In the future, we may tokenize royalty contracts. But first, we need legal clarity, user adoption, and platform trust. Right now, royalties provide everything we need to scale fractional real estate globally. Tech will follow. Model comes first.

Q10 Final word: why does choosing the right model matter so much today?

Because we’re seeing platforms collapse — especially in the loan and equity space. Markets are shifting fast, and operators with over-promised returns are crashing. Royalties are the only model that don’t expose the platform to performance risk. It’s a resilient model that protects both investors and operators. That’s why we believe royalties — and BlockTech — represent the supreme model in fractional real estate.

Subscribe now

Conclusion

Tokenization will eventually transform how real estate is owned, traded, and financed — but today, the battle is about building trust-first models that can integrate tokenization later rather than rely on it too soon.

Royalty-based frameworks like Block Tech’s represent a pragmatic bridge — legally clear, performance-aligned, and ready for digital rails when regulation and interoperability mature.

In other words, royalties today, tokenization tomorrow — a sustainable path toward real estate’s digital future.

References

• https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf

• https://www.coindesk.com/opinion/2025/02/07/rwa-tokenization-is-going-to-trillions-much-faster-than-you-think

• For Q&A, answers as provided by Gregory Brenig, Founder, Block Tech & NLG Consulting

Bios

Gregory Brenig is the Founder of Block Tech, a leading white-label software provider in fractional real estate. With over 18 years of experience in real estate, business, and finance, Gregory combines deep market expertise with a strong vision for digital transformation. He is also the author of “Level Up in Fractional Real Estate: How to Build Passive Income to Reach Financial Freedom”, where he explores how fractional ownership models can redefine global access to real estate investment.

Amazon Link for the book : https://amzn.eu/d/4c0133j

Block Tech is a cutting-edge software company offering white-label solutions for royalty-based fractional real estate investment. Its fully automated platform enables real estate professionals to sell property fractions starting from €10, allowing investors to earn monthly rental income transparently and easily. Unlike tokenization, Block Tech’s model is based on royalty contracts, not securities — making it legally clear, compliant, and scalable under existing real estate regulation. Through its technology, Block Tech empowers brokers, developers, and asset managers to increase transactions, boost commissions, and open real estate investment to everyone.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

How Tokeny and Apex Group Are Shaping the Next Era of Digital Assets

What began as experimentation around blockchain rails has evolved into a major shift in how institutions issue, distribute, and manage financial products. Today, the most actively tokenized assets (stablecoins, tokenized money market funds, real estate and equities) share a simple promise of real-time operations, lower friction, and expanded access for investors.

Stablecoins and tokenized money market funds are leading growth, driven by the institutional need for continuous settlement (24/7) and improved treasury efficiency. Real estate is attracting global retail demand on the back of fractionalized access, proven by record-speed sellouts in markets such as Dubai. Meanwhile, tokenized equities are gaining strategic attention from major venues exploring on-chain settlement and collateralization features.

Yet the industry has been faced with the major bottleneck of interoperability. Without shared standards, tokenized assets cannot move across platforms. This is the gap Tokeny has solved with ERC-3643, an institutional-grade standard that embeds compliance inside the asset itself, enabling easy movement across issuers, custodians, and trading venues.

In May 2025, the acquisition of Tokeny by Apex Group marked a pivotal moment. Apex’s global servicing footprint—spanning custody, transfer agency, and fund administration—combined with Tokeny’s technology now allows institutions to adopt tokenization without replacing existing infrastructure. This creates a unified framework where tokenized money (stablecoin / deposits / CBDCs), funds and securities operate with full regulatory and operational support.

Tokenization is fast becoming more about scale, standards, and the architecture of trust being built.

💬 In my latest Q&A with Daniel Coheur, Global Head of Digital Assets and Fund Distribution at Apex Group, Co-Founder and Chief Commercial Officer (CCO) at Tokeny, we briefly discuss 5 key topics of Tokenization in Practice, Interoperability & Standards, Challenges & Misconceptions, Regulation & Compliance as well as the Road Ahead.

Q1 Tokenization in Practice: From your vantage point at Tokeny, what types of assets are most actively being tokenized today, and what are the key drivers behind this adoption?

A: The most active assets being tokenized today are cash through stablecoins, tokenized money market funds, real estate, and stocks.

Stablecoins and tokenized money market funds are growing the fastest. Markets need instant settlement and institutions want better treasury management with constant access to yield. Stablecoins already provide 24/7 settlement for trading and cross-border payments, and the market cap reached $305.694 billion on 13 November, according to Defillama. Stablecoin issuers and holders seek low-risk, highly liquid assets to serve as reserves and yield-bearing instruments. This is why tokenized money market funds are becoming popular. They support 24/7 subscription and redemption, offer predictable returns, collateralization and also fit naturally into existing treasury operations because the product is well understood and easy to integrate.

Real estate continues to attract interest because it is tangible and familiar. Investors like assets they can see. Dubai Land Department’s second tokenized real estate project sold out in a record one minute and 58 seconds in June, which shows how strong the retail and global appetite is when access becomes easier.

Stocks are also gaining momentum. Nasdaq and other major venues are exploring tokenized equities because on-chain settlement removes unnecessary delays and enables collateralization features.

Across all these categories, the drivers are the same. Institutions want real-time, cost-effective operations. Investors want easier access and new features. Tokenization turns these needs into a practical reality.

Q2 Interoperability & Standards: A lot of pilots stall because of lack of common standards. How is Tokeny addressing interoperability so that tokenized assets can actually trade seamlessly across platforms?

A: If each issuer, exchange, or administrator uses a different setup, the assets cannot move across platforms. The industry cannot scale without a shared standard.

Tokeny addresses this through ERC 3643, which standardises how regulated assets are created, controlled, and operated. The compliance rules live inside the token rather than inside each platform. This means any service provider, custodian, or distributor can work with the tokenized asset in a standardised way.

The result is plug-and-play interoperability. Assets can be issued on any platforms on any blockchain, serviced by any administrator, and traded across multiple platforms while enforcing compliance at each transaction. Only qualified users can transfer when all conditions are met.

Subscribe now

Q3 Challenges & Misconceptions: What are the biggest misconceptions you encounter about tokenization, and what challenges still need to be solved for wider institutional adoption?

A common misconception is that once you issue a token, everything else becomes automatic. In reality, tokenized securities are operated very differently from traditional securities. You still need transfer agents, fund administrators, and custodians who know how to manage on-chain cap tables, wallets, and on-chain compliance.

Many issuers struggle to find partners who can actually service their tokenized assets. Their existing transfer agent or administrator is often not yet able to support tokenized positions, on-chain corporate actions, or recovery processes.

Another misconception is that the challenge is purely technological. The real barrier is switching cost. Traditional players already run large operational infrastructures. Changing these systems is expensive and risky. For many institutions, the cost to replace their existing setup is higher than the potential gain. To scale the industry, we need to let them upgrade on-chain within the infrastructure they already trust.

This is where the Apex Group acquisition of Tokeny becomes important. Apex brings 22 years of servicing experience and supports $3.5 trillion of assets. By embedding Tokeny’s tokenization technology directly into Apex Group’s infrastructure, institutions can embrace tokenization inside the same trusted framework they use today, with the full stack of tokenization technology, transfer agency, and fund administration services.

That’s what Apex Digital 3.0 offers. It allows asset managers and GPs to launch hybrid funds where existing funds become tokenized, or to launch fully native tokenized funds with all required services in one place.

Q4 Regulation & Compliance: How do evolving regulations (like MiCA in the EU, the GENIUS Act in the US) impact the tokenization landscape, and what role do regulated custodians and platforms such as Tokeny play in building institutional trust?

MiCA and the GENIUS Act provide clear frameworks for stablecoins. This clarity is important because issuers finally know how reserves must be held, how reporting must work, and what investor protections are required. One interesting point is that some restriction requirements may push stablecoin issuers toward ERC-3643-based permissioned token models. This ensures only eligible users can hold or transfer the stablecoin when all conditions are met.

For tokenized securities, most jurisdictions follow a simple principle: same assets, same rules. If a bond or fund is regulated off-chain, it must follow the same rules on-chain. The challenge is translating those rules into something enforceable in a decentralised environment.

This is where Apex Group and Tokeny play a key role. Our framework ensures any regulatory or issuer rule can be translated into on-chain logic and enforced by the token itself. Who can hold the token. When and how it can be transferred. What restrictions apply. Issuers maintain full 360 degree control so they can meet regulatory requests.

Combined with Apex Group as a regulated custodian, transfer agent, and fund administrator, institutions get a trusted environment where tokenized assets operate under the same compliance standards as traditional products. This builds the institutional confidence needed for scale.

Q5 The Road Ahead: Looking 3–5 years out, what do you see as the most promising use cases for tokenization — and what role do you envision platforms like Tokeny playing in the broader digital asset ecosystem?

Stablecoins will become mainstream for everyday people, even if they never realise they are using them. They will be embedded into the banking apps and payment platforms people already trust. Instant settlement and always-on yield will become the default experience.

Every major fund will have a tokenized version, and institutional investors will hold tokenized products as a normal part of their portfolios. Tokenized money market funds, private credit, and regulated stablecoin reserves will be standard building blocks for treasury, payments, and distribution.

In this world, the technology disappears into the background. Users do not think about tokenization. They simply get faster access, real time operations, and better transparency.

Platforms like Tokeny become the infrastructure layer that makes this possible, but invisible. Embedded inside Apex Group’s global servicing framework, tokenized products work inside the same institutional environment managers rely on today.

The end result is simple. Tokenized assets become part of everyday financial life. The experience feels natural for users and fully compliant for institutions.

Conclusion: Tokenization is accelerating because it solves real institutional problems—settlement delays, operational inefficiencies, and distribution barriers. With Tokeny’s standards integrated into Apex Group’s global platform, the industry finally gains the infrastructure it needs to scale. The next wave of digital assets will be compliant, interoperable, and seamlessly embedded into institutional finance.

Subscribe now

References

• https://www.khaleejtimes.com/business/property/dubai-second-tokenised-property-sold-in-record-time-of-under-2-minutes

• https://docs.tokeny.com/docs/the-erc-3643-token-standard

• https://tokeny.com/apex-group-acquires-majority-stake-in-tokeny-to-catalyze-widespread-industry-tokenization-adoption/

• https://www.weforum.org/stories/2024/12/tokenization-blockchain-assets-finance/

• https://www.galaxy.com/insights/perspectives/stablecoins-defi-impact-credit-creation#:~:text=Conclusion-,The%20Rise%20of%20Stablecoins,future%20in%20brand%20new%20ways.

• For Q&A, answers as provided by Tokeny

Bios

Daniel Coheur

Daniel Coheur is the Global Head of Digital Assets and Fund Distribution at Apex Group, a role he assumed following Apex’s acquisition of Tokeny, the leading provider of tokenisation and compliance infrastructure, which he co-founded and led as Chief Commercial Officer for eight years.

At Apex, Daniel drives the Group’s global digital asset strategy, integrating tokenisation, on-chain compliance, and innovative fund distribution solutions across its network of more than 14,000 fund managers.

Prior to founding Tokeny, Daniel built an extensive corporate career scaling transaction-based enterprises in capital markets (Clearstream Banking, part of Deutsche Börse) and telecommunications (Syniverse, owned by The Carlyle Group). A committed entrepreneur, he has mentored and funded several start-ups and founded his own investment boutique throughout his career.

Tokeny

Tokeny is a leading onchain finance platform and part of Apex Group, a global financial services provider with over 13,000 people across 112 offices in 52 countries. With seven years of proven experience, Tokeny provides financial institutions with the technical tools to represent assets on the blockchain securely and compliantly without facing complex technical hurdles.

Institutions can issue, manage, and distribute securities fully onchain, benefiting from faster transfers, lower costs, and broader distribution. Investors enjoy instant settlement, peer-to-peer transferability, and access to a growing ecosystem of tokenized assets and DeFi services. From opening new distribution channels to reducing operational friction, Tokeny enables institutions to modernize how assets move and go to market faster, without needing to be blockchain experts.

Apex Group

Apex Group is dedicated to driving positive change in financial services while supporting the growth and ambitions of asset managers, allocators, financial institutions, and family offices. Established in Bermuda in 2003, the Group has continually disrupted the industry through its investment in innovation and talent.

Today, Apex Group sets the pace in fund and asset servicing and stands out for its unique single-source solution and unified cross asset-class platform which supports the entire value chain, harnesses leading innovative technology, and benefits from cross-jurisdictional expertise delivered by a long-standing management team and over 13,000 highly integrated professionals.

Apex Group leads the industry with a broad and unmatched range of services, including capital raising, business and corporate management, fund and investor administration, portfolio and investment administration, ESG, capital markets and transactions support. These services are tailored to each client and are delivered both at the Group level and via specialist subsidiary brands.

Building on decades of trusted access, the Group is also delivering the digital rails for tomorrow’s investment models and empower our clients to be bold. From tokenised funds to AI-powered distribution, Apex Digital 3.0 is the bridge between traditional finance and programmable, open ecosystems. This is our commitment to shaping the future of finance as accessible, secure, scalable, and seamless.

Learn more about Apex Digital 3.0: https://go.apexgroup.com/l/1011401/2025-11-26/2y5d8

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Why do banks matter in tokenization?

I have been researching Tokenization since early this year and have published about 13 articles on the topic, including collaborations with founders and industry experts in the field.

Having worked in Corporate & Investment Banking for over 17 years as a Banker and a Credit Officer (Deputy Head of Wholesale Credit Risk for Corporates & Financial Institutions), I was stumped when I couldn’t answer a simple question straight. And then I ended up with two more questions. So I have decided to do a three part series in relation to Banks & Tokenization.

Of course Tokenization touches many players in the financial markets. But why do banks matter in tokenization? Why has Tokenization not scaled (in banks) despite successful pilots? What would a strategic roadmap for banks entail for the road ahead? Sitting with these questions helped me gain clarity and provide structure to this topic. Asking questions is great, but the right questions are key for unlocking deeper knowledge as well as problem solving.

Why do banks matter in Tokenization?

As tokenization matures into institutional-scale infrastructure, banks play a central role in shaping how these markets grow.

• Tokenization is not simply about issuing assets on-chain — it is about redesigning the architecture that governs settlement, custody, compliance, collateral, distribution, and market access.

• This architecture is exactly what banks manage today across capital markets, corporate banking, and treasury operations.

Banks are entering tokenization because the technology solves long-standing inefficiencies of slow settlement cycles, capital trapped in liquidity buffers, fragmented compliance layers, and manual asset-servicing processes. Tokenized rails introduce atomic settlement, improved collateral mobility, real-time reporting, and programmable compliance - outcomes that are directly aligned with institutional priorities.

Banks bring three critical advantages:

1. Regulatory trust (licenses, governance, compliance)

2. Balance sheet power (liquidity, credit, operational resilience)

3. Distribution (corporate clients, sovereigns, institutions, treasurers)

As a result, tokenization strengthens rather than disrupts incumbent financial institutions. Before exploring the roadmap for banks adopting tokenization, it is important to understand their fundamental role: they remain the backbone of global financial infrastructure, and tokenization enhances their ability to serve clients with greater efficiency, transparency, and scale.

Subscribe now

Tokenization is about New Infrastructure

To understand why banks are central, we have to shift our focus towards architecture and away from assets. Tokenization rebuilds the underlying rails on which assets are issued, traded, settled, serviced, and reported.

Banks already run these rails. Tokenization simply modernizes them.

For decades, banks have faced chronic inefficiencies:

• T+1/T+2 settlements that create counterparty exposure

• Reconciliation failures across siloed systems

• Capital trapped in settlement buffers

• Fragmented collateral processes

• Slow, manual corporate actions

• Dual record-keeping across custodians and transfer agents

Tokenization solves these issues not by reinventing finance, but by redesigning the infrastructure that moves financial value.

Where Banks Appear in the Tokenization Stack

Why Banks Must Tokenize

There are three existential reasons banks cannot ignore tokenization:

1. Stablecoins and fintech rails are threatening core banking revenue

Tokenized deposits protect deposit share and keep payment flows within banks.

2. Institutional clients are already moving liquidity onto tokenized rails

BlackRock’s BUIDL fund, Franklin Templeton’s on-chain MMFs, and JPM Onyx are becoming treasury infrastructure. Banks must support what their clients already want to use.

3. Tokenized collateral and settlement reduce capital costs

Atomic settlement reduces counterparty exposure, which reduces capital requirements under Basel III. This has profound P&L implications. Tokenization compresses traditional settlement exposure to nearly zero, which can reduce CCR and CVA capital charges under Basel III.

However, as IOSCO highlights, it simultaneously introduces new forms of operational and infrastructural counterparty risk — such as smart contract governance, interoperability failures, and custodial key management.

The Truth: Tokenization Strengthens Banks

Tokenization isn’t disruptive to banks — it empowers them. It lets them move liquidity faster, reduce operational risk, unlock balance sheet efficiency, deliver better client service, integrate global markets, automate compliance, scale asset servicing and reduce cost-to-serve.

Banks that lean in will own the next decade of market infrastructure. Banks that hesitate will lose core revenue to tokenized alternatives. Tokenization is the future of financial infrastructure — and banks sit at the centre of it. However, tokenization has not scaled despite successful pilots undertaken by banks. Part II of this series explores blocks to sustainable scalability.

Subscribe now

References

• https://www.bis.org/cpmi/publ/d225.pdf

• https://www.newyorkfed.org/newsevents/news/financial-services-and-infrastructure/2023/20230518

• https://reports.weforum.org/docs/WEF_Asset_Tokenization_in_Financial_Markets_2025.pdf

• https://www.icmagroup.org/fintech-and-digitalisation/fintech-resources/tracker-of-new-fintech-applications-in-bond-markets/

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.singulart.com/en/artist/gaya-chandrasekaran-62057?show_popin=subscribe

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Featuring insights from industry practitioners exploring hybrid financial architectures.

As tokenization goes from idea to implementation, the conversation and the momentum is shifting. The earlier phases of this series explored how hybrid financial architecture is being built, from regulatory design to interoperable infrastructure. Part III moves into the real engine of adoption: 𝒎𝒂𝒓𝒌𝒆𝒕 𝒃𝒆𝒉𝒂𝒗𝒊𝒐𝒖𝒓 𝒂𝒏𝒅 𝒕𝒉𝒆 𝒊𝒏𝒄𝒆𝒏𝒕𝒊𝒗𝒆𝒔 𝒔𝒉𝒂𝒑𝒊𝒏𝒈 𝒕𝒉𝒆 𝒏𝒆𝒙𝒕 𝒈𝒆𝒏𝒆𝒓𝒂𝒕𝒊𝒐𝒏 𝒐𝒇 𝒇𝒊𝒏𝒂𝒏𝒄𝒊𝒂𝒍 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒔.

In this final part of my Q&A with Alexandr Rudnov, Founder of Defence Investments and Secura, we look beyond the rails and into the patterns forming across institutional desks, crypto-native communities, and early tokenized markets. The conversation touches on what truly drives adoption, which user segments will lead the next wave, and how tokenized real-world assets may evolve into a core asset class on DeFi platforms.

We also look ahead — examining misconceptions that still hold back traditional finance, and what founders, investors, and policymakers must prioritise to build a responsible, scalable digital asset economy.

Part III is about 𝒅𝒊𝒓𝒆𝒄𝒕𝒊𝒐𝒏, how behaviour is changing, what the next decade is signalling, and why the long-term architecture of global markets will look very different from the systems we operate in today.

Defence Investments has spent nearly a decade designing institutional-grade blockchain infrastructure for asset managers and funds, while Secura represents the next leap — a DeFi protocol bridging tokenized U.S. equities with on-chain yield tools.

𝑰𝒏 𝒕𝒉𝒊𝒔 𝒆𝒙𝒄𝒍𝒖𝒔𝒊𝒗𝒆 𝒕𝒉𝒓𝒆𝒆-𝒑𝒂𝒓𝒕 𝑸&𝑨 𝒔𝒆𝒓𝒊𝒆𝒔, 𝒘𝒆 𝒄𝒐𝒗𝒆𝒓 6 𝒕𝒐𝒑𝒊𝒄𝒔 of 1. Introduction & Context, 2. Institutional vs. DeFi Tokenization Models, 3. Regulation, Compliance & Trust, 4. Technology & Infrastructure, 5. Market Adoption & Investor Behaviour and 6. The Vision Forward.

𝙋𝙖𝙧𝙩 𝙄𝙄𝙄 𝙘𝙤𝙫𝙚𝙧𝙨

5. 𝑀𝑎𝑟𝑘𝑒𝑡 𝐴𝑑𝑜𝑝𝑡𝑖𝑜𝑛 & 𝐼𝑛𝑣𝑒𝑠𝑡𝑜𝑟 𝐵𝑒ℎ𝑎𝑣𝑖𝑜𝑢𝑟: Q12, Q13 & Q14 ( tokenized products: institutional investors vs crypto-native users, drivers of mainstream adoption, future of Tokenized RWAs on DeFi Platforms)

6. 𝑇ℎ𝑒 𝑉𝑖𝑠𝑖𝑜𝑛 𝐹𝑜𝑟𝑤𝑎𝑟𝑑: Q15, Q16 & Q17 (future dynamics: hybrid model vs institutional infrastructure vs DeFi protocols, busting a key misconception of tokenization or DeFi amongst TradFi professionals, advice to founders / investors / policymakers trying to shape the digital asset economy responsibly)

Subscribe now

Market Adoption & Investor Behaviour

Q12. How receptive are institutional investors versus crypto-native users to tokenized products?

A. The level of adoption differs mainly in mindset.

Institutional investors are cautious but increasingly interested — they see tokenization as an infrastructure upgrade rather than a speculative play. Their priorities are regulatory clarity, audited systems, and capital protection. Once those elements are in place, they move fast because the efficiency gains are clear.

Crypto-native users, on the other hand, are already comfortable with risk and experimentation. They value openness, composability, and yield opportunities more than compliance. However, they often underestimate the complexity behind tokenized real-world assets — governance, legal structure, and liquidity management.

In short, institutions move slower but deeper, while DeFi users move faster but shallower. The convergence of these two groups will define the next phase of tokenized finance.

Q13. What do you think will accelerate mainstream adoption — technology maturity, regulatory clarity, or demand for yield in a low-return world?

A. In my view, the main driver won’t be yield, regulation, or technology itself — it will be clarity of purpose.

Mass adoption will come when institutional players clearly understand what real business problems tokenization solves and what benefits it brings to their operations — efficiency, transparency, liquidity, or new revenue models.

Once they have a stable risk framework and a tangible business model, adoption will move fast. The rest is just part of the natural evolution: yield is a motivator, regulation is a brake, and technology is the rail that enables new markets.

Q.14 Do you foresee tokenized stocks and real-world assets becoming a major asset class on DeFi platforms in the next five years? Yes — and the research strongly supports that view. Major financial institutions like BlackRock are already pointing in this direction. Equities and other traditional market instruments are the most natural candidates to move onto tokenized rails, followed by real-world assets such as real estate.

It’s a complex and slow transition, but inevitable. As Larry Fink said, in time “everything will be tokenized” — simply because it will make no sense to operate any other way.

The Vision Forward

Q15. Looking ahead, do you think the future lies in a hybrid model — where institutional infrastructure and DeFi coexist — or will one side dominate?

A. If we look at history and the evolution of technology cycles, the hybrid model seems to be a transitional phase rather than the final state. The real question is how long this transition will take.

Web3 represents a fundamentally different paradigm — one built around decentralization, transparency, and programmable trust. It’s hard to predict how long institutional and decentralized systems will coexist, but technologically, everything is gradually moving toward the blockchain layer.

That said, we’re still at the very beginning. Even the solutions we’re building today will likely go through several evolutionary cycles — they’ll be rebuilt, pivoted, and refined as the ecosystem matures. For now, we operate within today’s coordinates, knowing that the direction of travel is clear, even if the destination is still forming.

Q16. If you could change one misconception about tokenization or DeFi among traditional finance professionals, what would it be?

A. The biggest misconception is that blockchain, crypto, tokenization, and DeFi are the same thing — or worse, that they’re inherently speculative or risky. In reality, these are just tools. If you use them for scams, it’s a scam. If you use them for business, it’s business.

Institutions need to understand this difference and start seeing blockchain as an infrastructure layer, not a headline. That means learning, not delegating — understanding how blockchain works, what business problems it can solve, and where it brings real efficiency or trust.

Unfortunately, many still rely on marketing narratives instead of education. People confuse Bitcoin with blockchain, or assume “crypto = Bitcoin.” But when we talk about tokenization and DeFi, we’re not talking about Bitcoin at all — we’re talking about Ethereum and beyond, the technologies that actually enable programmable finance.

In short, the main issue isn’t technology — it’s a lack of understanding and curiosity. The moment that changes, adoption will accelerate naturally.

Q17. Finally, what advice would you give to founders, investors, and policymakers trying to shape the digital asset economy responsibly?

A. For founders, investors, and policymakers, my main advice is simple: build with clarity and alignment. Founders should focus on solving real problems, not chasing trends. Tokenization is not a shortcut to funding — it’s a tool for creating efficient, transparent systems.

Investors should look beyond hype and evaluate what’s actually being built — the architecture, the sustainability, and the economic logic behind each product.

Policymakers, in turn, should aim to enable innovation without killing experimentation. The role of regulation is not to block progress but to create predictable and safe conditions for it.

The digital asset economy will mature when these three groups — builders, capital, and regulators — start speaking the same language.

Subscribe now

References

• https://blockworks.co/news/what-are-real-world-assets-defis-newest-yield

• https://www.dtcc.com/dtcc-connection/articles/2025/september/11/the-coexistence-imperative-bridging-traditional-finance-and-emerging-digital-asset-infrastructure?utm_source=chatgpt.com

• https://research.binance.com/static/pdf/real-world-asset-report.pdf

• For Q&A, answers as provided by Alexandr Rudnov, Partner, Defence Investments & Secura. The perspectives shared below are those of the interviewee. Readers are encouraged to perform their own due diligence on any referenced entities.

Bio

Alexandr Rudnev is a Partner at Defence Investments and Secura. He focuses on designing institutional Web3 infrastructure that bridges traditional finance and decentralized ecosystems through tokenization, stablecoin systems, and DeFi investment platforms. His work centers on building transparent and resilient architectures for the next generation of financial markets.

P.S. In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Featuring insights from industry practitioners exploring hybrid financial architectures.

The most transformative aspect of global finance lies in bridging traditional finance (TradFi) with decentralised finance (DeFi) and tokenization is what’s making this possible. Tokenization is quietly rebuilding the infrastructure of capital markets enabling assets that were only accessible by institutions to move on-chain with transparency, speed and accessibility.

This convergence is more architectural than technological and lies at the intersection of regulation, trust and open protocols. On one hand, institutions are tokenizing assets within regulated frameworks, bringing efficiency and transparency to established markets. On the other, DeFi platforms are designing open systems that make these assets accessible to a wider audience, free from traditional intermediaries. Between them lies an emerging hybrid layer where regulated assets flow on decentralized rails.

💬 In Part II of my latest discussion with 𝐀𝐥𝐞𝐱𝐚𝐧𝐝𝐫 𝐑𝐮𝐝𝐧𝐨𝐯, Partner at Defence Investments and Secura. Together, we explore how regulatory architecture, compliance layers and technology can work in tandem as complementary building blocks shaping the next era of capital markets.

Defence Investments has spent nearly a decade designing institutional-grade blockchain infrastructure for asset managers and funds, while Secura represents the next leap — a DeFi protocol bridging tokenized U.S. equities with on-chain yield tools.

𝑰𝒏 𝒕𝒉𝒊𝒔 𝒆𝒙𝒄𝒍𝒖𝒔𝒊𝒗𝒆 𝒕𝒉𝒓𝒆𝒆-𝒑𝒂𝒓𝒕 𝑸&𝑨 𝒔𝒆𝒓𝒊𝒆𝒔, 𝒘𝒆 𝒄𝒐𝒗𝒆𝒓 6 𝒕𝒐𝒑𝒊𝒄𝒔 of 1. Introduction & Context, 2. Institutional vs. DeFi Tokenization Models, 3. Regulation, Compliance & Trust, 4. Technology & Infrastructure, 5. Market Adoption & Investor Behaviour and 6. The Vision Forward.

Part I covered

1. 𝐼𝑛𝑡𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 & 𝐶𝑜𝑛𝑡𝑒𝑥𝑡 - Q1& Q2 (how did Defence Investments and Secura come about, how has the perspective on tokenization evolved over time)

2. 𝐼𝑛𝑠𝑡𝑖𝑡𝑢𝑡𝑖𝑜𝑛𝑎𝑙 𝑣𝑠 𝐷𝑒𝐹𝑖 𝑇𝑜𝑘𝑒𝑛𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑀𝑜𝑑𝑒𝑙𝑠 - Q3, Q4 & Q5 (main challenges in tokenizing traditional assets today, Secura’s approach merging regulated US equities with DeFi yield mechanisms, institutional vs DeFi-native tokenization models)

You can read Part I here

https://www.linkedin.com/pulse/bridging-tradfi-defi-architecture-trust-tokenization-gaya-mo82e/?trackingId=AZsog2WPTK2gtMnULvoQ3A%3D%3D

𝙋𝙖𝙧𝙩 𝙄𝙄 𝙘𝙤𝙫𝙚𝙧𝙨

3. 𝑅𝑒𝑔𝑢𝑙𝑎𝑡𝑖𝑜𝑛, 𝐶𝑜𝑚𝑝𝑙𝑖𝑎𝑛𝑐𝑒 & 𝑇𝑟𝑢𝑠𝑡 - Q6, Q7 & Q8 (navigating compliance across jurisdictions for Defence Investments & Secura, perspective on global regulatory alignment, role of custody and investor protection in bridging institutional & DeFi adoption)

4. 𝑇𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑦 & 𝐼𝑛𝑓𝑟𝑎𝑠𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑒 - Q9, Q10 & Q11 (infrastructure, interoperability and bottlenecks in adoption - settlement, identity, data or liquidity)

Subscribe now

Regulation, Compliance & Trust

Q6. Regulatory frameworks for tokenized securities and DeFi yield products are still evolving. How does each of your ventures navigate compliance across jurisdictions?

A: From the Defence Investments side, we act as a technology partner, not a legal issuer. That’s why our first step in any project is understanding the regulatory perimeter in which the client’s tokenized business will operate — where the token will live, what type of investors it will serve, and what jurisdictions it will touch.

Compliance starts during the design phase, not after launch. We work closely with the client’s legal team to create an architecture that meets all local regulatory requirements while still preserving the product’s functionality within its target environment. If the regulations demand traditional KYC/AML checks, for instance, we adapt the design accordingly — whether that means implementing identity verification layers, or shifting toward a semi-centralized model that ensures full compliance.

We’ve collaborated with legal partners across the UAE, the U.S., Europe, and Asia, and can connect clients with trusted law firms in each region. The key is flexibility: the product must satisfy regulators, operate effectively for end users, and remain technically coherent.

In Secura, we follow the same philosophy. The legal structure is built on three principles:

• Full regulatory compliance — there are no exceptions when operating with real financial assets;

• Alignment with client expectations — the system must work for both institutions and DeFi-native users;

• Auditability and transparency — since part of the system runs on-chain, the off-chain component must be equally verifiable and auditable.

Ultimately, compliance for us is not a constraint but a design discipline — the way to ensure that innovation scales responsibly across jurisdictions.

Q7. How do you see global regulatory alignment (e.g., MiCA, SEC, FCA approaches) shaping the next wave of innovation in this space?

A: As I mentioned earlier, regulation is one of the biggest challenges — not because it’s too strict, but because it’s too fragmented. Most legal systems still operate within the logic of the old world, where jurisdiction ends at a national border. DeFi, however, exists in a borderless network. That creates a fundamental gap between how finance works today and how it’s already working on-chain.

Ideally, regulation should evolve toward inter-jurisdictional alignment, where countries recognize and respect shared digital asset standards. Unfortunately, we’re not there yet — each region is moving in its own direction. Asia, MENA, and parts of Africa are becoming more open and innovation-friendly, actively developing frameworks to attract Web3 and tokenization projects. Europe, in contrast, has taken a more cautious and restrictive stance, which is why we often see clients migrating their structures to more flexible jurisdictions.

In the U.S., regulation is just beginning to take shape. It’s still early, but encouraging: the largest capital market in the world is starting to formalize its approach to digital assets. Once the rules become clearer, it will likely accelerate adoption globally.

So while the lack of alignment slows innovation in the short term, in the long run it pushes the industry toward one direction — creating a new legal fabric that can coexist with the borderless nature of blockchain.

Q8. What role will custody and investor protection play in bridging institutional and DeFi adoption?

A: Custody providers are currently one of the most important parts of the digital asset infrastructure. In many ways, they serve as the bridge between institutional finance and blockchain-based solutions — not necessarily pure DeFi, but everything that relies on blockchain rails.

Their value comes from the functions traditional investors expect: security, insurance, and transparency. While this may seem to contradict the Web3 principle of “not your keys, not your coins,” custody offers something equally essential — legal protection and auditability. It allows institutions to safely hold, verify, and report their digital assets in a way regulators can recognize.

Custodians also make on-chain auditing possible, providing verifiable data about real asset holdings — something that traditional finance often struggles to do transparently. Through them, regulatory oversight and capital protection become feasible in a hybrid financial system.

So for now, custodians are critical bridges enabling the flow of funds between institutional capital and decentralized ecosystems. The future might evolve toward more self-custodial or programmable models, but today, custodians are what make institutional adoption of blockchain possible.

Technology & Infrastructure

Q9. From an infrastructure standpoint, what technologies underpin your platforms — and how do they differ from public-chain DeFi protocols?

A: From the Defence Investments side, we act as an external development partner, so our priority is always reliability over trendiness. We build financial systems, not experiments — and that means using technologies that have already passed stress tests and proven their stability over time. Sometimes clients come in with requests to use the “latest” or “hottest” stack, but we usually recommend the opposite: choose what’s battle-tested. In finance, trust, security, and resilience come before innovation.

For Secura, we apply the same principle. On one hand, we rely on familiar DeFi components that users already understand — established wallets, liquidity protocols, and interaction patterns. On the other, we carefully design the protocol’s foundation to ensure long-term reliability and predictable behavior under real market conditions.

In practice, this means combining trusted EVM-compatible infrastructure with well-audited smart contracts and modular architecture that can integrate both institutional and DeFi layers. It’s less about chasing novelty and more about building systems that can be trusted to handle real capital.

Q10. How do you approach interoperability, given the fragmentation between blockchain networks and regulatory domains? A: This question actually has two layers — regulatory and technical — and they’re closely connected.

From the regulatory side, we start by forecasting where our users will operate: who they are, which jurisdictions they belong to, and what legal frameworks apply to them. Each regulation, much like each blockchain, tends to form its own type of user profile. Understanding this helps us define where to focus and how to design compliant yet flexible architecture.

From the technical side, interoperability is a matter of sequencing and prioritization. We usually start with one network that fits our early adopters — for example, Base in the case of Secura — because it offers an active and open community for early-stage projects. Later, we expand to more conservative ecosystems like Ethereum, where capital volumes are larger but risk tolerance is lower.

Over time, we plan to connect additional networks to scale accessibility and liquidity. So the strategy is progressive: forecast the user landscape, build compliance around it, and expand across chains step by step.

Subscribe now

Q11. Tokenization promises efficiency and automation — but where do you still see the bottlenecks today (settlement, identity, data, or liquidity)?

Tokenization indeed improves efficiency and transparency — but several bottlenecks remain. The first is settlement. On-chain transactions can be instant, but traditional systems still rely on delayed clearing cycles and intermediaries. The gap between these two worlds creates friction.

The second is identity. KYC and AML remain largely off-chain, meaning that any bridge between TradFi and DeFi must constantly synchronize user data, which complicates compliance.

The third is data standardization. Asset information, audit trails, and valuation models are still fragmented. Without consistent standards, large-scale interoperability remains theoretical.

And finally, liquidity — most tokenized assets today exist in isolated silos. There’s no unified market depth, so true price discovery is limited.

In short, the technology is ready, but the infrastructure and regulation around it are not yet fully synchronized.

References

• https://blockworks.co/news/what-are-real-world-assets-defis-newest-yield

• https://www.dtcc.com/dtcc-connection/articles/2025/september/11/the-coexistence-imperative-bridging-traditional-finance-and-emerging-digital-asset-infrastructure?utm_source=chatgpt.com

• https://research.binance.com/static/pdf/real-world-asset-report.pdf

• For Q&A, answers as provided by Alexandr Rudnov, Partner, Defence Investments & Secura. The perspectives shared below are those of the interviewee. Readers are encouraged to perform their own due diligence on any referenced entities.

Bio

Alexandr Rudnev is a Partner at Defence Investments and Secura. He focuses on designing institutional Web3 infrastructure that bridges traditional finance and decentralized ecosystems through tokenization, stablecoin systems, and DeFi investment platforms. His work centers on building transparent and resilient architectures for the next generation of financial markets.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Featuring insights from industry practitioners exploring hybrid financial architectures.

The most transformative aspect of global finance lies in bridging traditional finance (TradFi) with decentralised finance (DeFi) and tokenization is what’s making this possible. Tokenization is quietly rebuilding the infrastructure of capital markets enabling assets that were only accessible by institutions to move on-chain with transparency, speed and accessibility.

This convergence is more architectural than technological and lies at the intersection of regulation, trust and open protocols. On one hand, institutions are tokenizing assets within regulated frameworks, bringing efficiency and transparency to established markets. On the other, DeFi platforms are designing open systems that make these assets accessible to a wider audience, free from traditional intermediaries. Between them lies an emerging hybrid layer where regulated assets flow on decentralized rails.

💬 My latest Q&A is with 𝐀𝐥𝐞𝐱𝐚𝐧𝐝𝐫 𝐑𝐮𝐝𝐧𝐨𝐯, Partner, Defence Investments and Secura, two ventures exploring this convergence. Through this conversation, we explore how architecture, compliance, and innovation can coexist not as competitors, but as complementary forces shaping the future of finance.

Defence Investments has spent nearly a decade designing institutional-grade blockchain infrastructure for asset managers and funds, while Secura represents the next leap — a DeFi protocol bridging tokenized U.S. equities with on-chain yield tools.

𝑰𝒏 𝒕𝒉𝒊𝒔 𝒆𝒙𝒄𝒍𝒖𝒔𝒊𝒗𝒆 𝒕𝒉𝒓𝒆𝒆-𝒑𝒂𝒓𝒕 𝑸&𝑨 𝒔𝒆𝒓𝒊𝒆𝒔, 𝒘𝒆 𝒄𝒐𝒗𝒆𝒓 6 𝒕𝒐𝒑𝒊𝒄𝒔 of 1. Introduction & Context, 2. Institutional vs. DeFi Tokenization Models, 3. Regulation, Compliance & Trust, 4. Technology & Infrastructure, 5. Market Adoption & Investor Behaviour and 6. The Vision Forward.

𝙋𝙖𝙧𝙩 𝙄 𝙘𝙤𝙫𝙚𝙧𝙨

1. 𝐼𝑛𝑡𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 & 𝐶𝑜𝑛𝑡𝑒𝑥𝑡 - Q1& Q2 (how did Defence Investments and Secura come about, how has the perspective on tokenization evolved over time)

2. 𝐼𝑛𝑠𝑡𝑖𝑡𝑢𝑡𝑖𝑜𝑛𝑎𝑙 𝑣𝑠 𝐷𝑒𝐹𝑖 𝑇𝑜𝑘𝑒𝑛𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑀𝑜𝑑𝑒𝑙𝑠 - Q3, Q4 & Q5 (main challenges in tokenizing traditional assets today, Secura’s approach merging regulated US equities with DeFi yield mechanisms, institutional vs DeFi-native tokenization models)

Subscribe now

Q1. You’re involved in both Defence Investments and Secura — one focused on institutional Web3 solutions and the other on tokenizing U.S. equities through DeFi. How did these two ventures come about, and what common thread connects them?

A: Defence Investments started almost a decade ago as a group of blockchain and finance professionals passionate about building real products — not just concepts. Over the years, we’ve delivered dozens of projects: from DeFi systems and stablecoin architectures to large-scale institutional platforms for asset managers, family offices, and investment funds. That experience naturally evolved into a focus on tokenization and institutional-grade infrastructure — where technology meets regulation and trust.

By 2025, a clear global pattern emerged: traditional markets were running out of new liquidity, while entire regions — Asia, Africa, Latin America — were full of investors who couldn’t access stock markets directly. We saw both the problem and the opportunity.

That’s how Secura was born — as a DeFi-native protocol designed to bridge this gap. It connects on-chain investors, who already hold crypto capital, with tokenized real-world assets like U.S. equities, offering yield tools and transparent exposure without intermediaries.

Since Defence Investments already had deep expertise in tokenization, architecture, and compliance, we didn’t need years or millions to start — just focus and execution. In this sense, Defence Investments is the builder of the Secura protocol, while Secura itself unites co-founders and early investors driving its market rollout.

The shared foundation between both ventures is simple: bridging worlds — bringing institutional finance and DeFi closer through architecture that’s secure, compliant, and globally accessible.

Q2. What first drew you to the tokenization space, and how has your perspective evolved over time?

A: At our core, we’ve always been blockchain enthusiasts — inspired by how this technology can solve real human and economic problems. Long before “tokenization” became a mainstream concept, we were already experimenting with representing data, value, and even yield streams as digital tokens.

Over time, it became clear that tokenization isn’t just a trend — it’s the foundation for the next financial infrastructure. It addresses fundamental issues like access to capital, efficiency, and the cost of intermediation. It allows assets to move faster, with lower friction, and with far greater transparency.

What began as a technological experiment has now evolved into an institutional transformation. We no longer see tokenization as a concept, but as a practical tool to rebuild how financial markets operate. Being part of building that new infrastructure — where finance and technology finally align — is what truly drives us.

Q3. At Defence Investments, you work on white-label tokenization platforms for institutions. What are the main challenges clients face when trying to tokenize traditional assets today?

A: The real challenges begin long before the tokenization itself. Technically, creating a token is easy — understanding why and what to tokenize is the hard part. Many clients see tokenization as a marketing move to attract attention. That’s a fundamental mistake. Others have real business goals but lack a clear model that can function in a tokenized environment. So before any technical work begins, we often help them refine or even redesign their business architecture to make it viable on-chain.

Once we move to the tokenization stage, the first major obstacle is regulation. Legal frameworks remain highly fragmented across juriszdictions. Tokenization promises global accessibility — yet legal borders often limit it. Some projects choose to relocate to more flexible jurisdictions, while others remain bound by local laws.

The second challenge is market readiness. After tokenizing an asset, you still need to reach and educate the right audience — investors who understand how to interact with your token: buy, hold, stake, or trade it. Many assume that once an asset is tokenized, it will “sell itself.” That’s similar to the early Web2 illusion that launching a website automatically brings customers. In reality, you need a strategy, communication, and a proper product layer.

The third challenge is tokenomics — the economic engine of any tokenized system. Tokenomics is not about minting tokens; it’s about translating a real business model into an on-chain economic system. It defines supply, demand, incentives, and sustainability. Poor tokenomics can destroy even a great business idea.

Finally, there’s education and perception. Terms like liquidity provision or market-making are still misunderstood and often viewed negatively. In truth, they are critical tools for stability and user confidence.

So, in short, technology is rarely the issue. The real work lies in business logic, regulation, market fit, and economic design — that’s where most tokenization projects either succeed or fail.

That’s why we often say: tokenization is 20% technology and 80% architecture — business, legal, and economic. And this is exactly where our second venture, Secura, takes a different path — applying the same principles of structure and trust inside a DeFi-native environment.

Subscribe now

Q4. Secura seems to take a very different approach — merging regulated U.S. equities with DeFi yield mechanisms. Can you explain how this model works and what makes it distinct from conventional tokenization?

A: Secura is designed as a hybrid protocol that connects real-world, regulated assets — starting with U.S. equities — to decentralized yield mechanisms. The idea is to give investors from any part of the world the ability to gain exposure to real, income-generating stocks without relying on traditional intermediaries or KYC-bound brokers.

In traditional tokenization, assets are usually mirrored on-chain through a centralized issuer — for example, a fund or SPV that holds custody and issues tokenized shares. It’s a closed-loop system where users interact within a regulated perimeter. In contrast, Secura operates on open DeFi rails. It brings tokenized equities into decentralized liquidity pools, allowing investors to combine exposure to real-world assets with DeFi yield strategies — such as delta-neutral positions, synthetic hedging, or liquidity-backed rewards.

The mechanism is two-layered. The base layer is built on top of tokenized representations of U.S. stocks, ensuring transparency and traceability through on-chain records. The DeFi layer adds yield generation, liquidity aggregation, and risk management strategies that allow users to earn additional returns without leverage or speculation.

What makes Secura different is its architecture of trust — combining compliance-level infrastructure with DeFi usability. Investors retain the flexibility and transparency of decentralized finance, while the underlying assets remain verifiable and institutionally recognized.

Looking ahead, the model is fully scalable across markets. After U.S. equities, we plan to expand into regions like Asia, Africa, and Latin America — where investor demand is high, but access to traditional markets remains limited. In that sense, Secura is not just a protocol; it’s a new access layer for global capital — bridging regulated markets and the open DeFi economy.

Q5. In your view, what are the biggest contrasts between institutional tokenization and DeFi-native tokenization? Are they complementary or competing paradigms?

A: Institutional and DeFi tokenization often look like two opposite worlds — one built on regulation, the other on open code. But in reality, they’re two layers of the same emerging financial infrastructure.

Institutional tokenization focuses on compliance, legal structure, and investor protection. Assets are typically issued through licensed entities — SPVs, funds, or custodians — with full KYC/AML, regulated settlement, and off-chain record keeping. The goal is to make traditional finance more efficient and transparent without breaking its legal continuity.

DeFi-native tokenization, in contrast, is built on open networks where code replaces intermediaries. Assets live entirely on-chain, liquidity is programmable, and transactions are permissionless. It brings accessibility, automation, and global reach — but also introduces new risks tied to smart contracts and market volatility.

They differ in architecture but complement each other in function. Institutional tokenization brings credibility, legal finality, and trust for large capital, while DeFi brings innovation, efficiency, and liquidity. When combined, they form a hybrid model where regulated assets can move at the speed of DeFi — with on-chain transparency and off-chain compliance.

In short, the future isn’t about choosing one side. It’s about integration — creating bridges where institutional finance provides the foundation of trust, and DeFi provides the rails of execution. The winners will be those who understand how to align these two paradigms, not separate them.

References

• https://blockworks.co/news/what-are-real-world-assets-defis-newest-yield

• https://www.dtcc.com/dtcc-connection/articles/2025/september/11/the-coexistence-imperative-bridging-traditional-finance-and-emerging-digital-asset-infrastructure

• https://research.binance.com/static/pdf/real-world-asset-report.pdf

• For Q&A, answers as provided by Alexandr Rudnov, Partner, Defence Investments & Secura. The perspectives shared below are those of the interviewee. Readers are encouraged to perform their own due diligence on any referenced entities.

Bio

Alexandr Rudnev is a Partner at Defence Investments and Secura. He focuses on designing institutional Web3 infrastructure that bridges traditional finance and decentralized ecosystems through tokenization, stablecoin systems, and DeFi investment platforms. His work centers on building transparent and resilient architectures for the next generation of financial markets.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

In last week’s article titled ‘Real Estate Tokenization in Practice: Part I’ we discussed a brief overview of Real Estate Tokenization.

Although real estate is expected to form the largest share of estimated market size of $30tn for Real World Assets (RWAs) according to a Security Token Market report dated Feb 2025, scalability is currently quite complex. We concluded that the challenges were more around regulation, compliance, custody and interoperability. And that the future will depend on collaboration between various stakeholders to build an interoperable, compliant ecosystem that propels innovation with investor safeguards.

Meanwhile, some innovators are exploring alternative models such as royalty-based or revenue-sharing structures that allow fractional participation without tokenizing ownership or triggering securities regulations.

With the strengthening of the foundational layers, tokenization could transform real estate as an asset class. Until then, it is not about who tokenizes first, rather it is about who is ready to jump in at ‘the right time’ to scale sustainably.

That brings me to the current article. I had the absolute pleasure of interviewing Gregory Brenig, Founder of Block Tech and Author of ‘Level Up in Fractional Real Estate’. Our Q&A have been presented in two parts, each addressing three core topics.

Part I was published last week. You can read the full article here: https://www.linkedin.com/pulse/real-estate-tokenization-practice-part-i-gaya-chandrasekaran-mba-ms-eiqde/?trackingId=BZ%2B0lmRbQqGINoc%2FJJhpjQ%3D%3D

Subscribe now

Current article covers Part II and covers:

• Technology & Infrastructure - Q8 & Q9 (tech stack, cost & efficiency of royalty based model, implications of absence of tokens)

• Future Outlook - Q10 & Q11 (future of both models: can they co-exist, landscape in 2030: digital models vs. traditional structures)

• Advice for Investors & Builders - Q12 & Q13 (key factors to consider before capital commitment into these models, advice to entrepreneurs in the real estate digitisation space exploring tokenization vs alternatives)

Q8 Tokenization relies heavily on blockchain infrastructure, smart contracts, and custody solutions. What kind of infrastructure does your model require, and how does it compare in terms of cost and efficiency?

This is where the difference is night and day.

• Tokenization requires a heavy stack: blockchain nodes, smart contracts, custodians, KYC/AML modules tied to financial licenses, and often third-party wallet integrations. This infrastructure is not only costly, but it also creates friction at every step for the end user.

• The Block Tech royalty model is the opposite: it’s based on legal contracts and real estate licenses, not speculative blockchain infrastructure. Our platform requires nothing more than a standard SaaS environment (secure servers, payment gateways, accounting integration). Costs are drastically lower, efficiency is much higher, and scalability is immediate because every jurisdiction already has a clear legal framework for real estate.

The result? While tokenization projects spend years and millions just trying to become compliant, Block Tech clients can launch a fully operational fractional real estate platform in weeks, under a model that is simple, transparent, and fully sustainable.

That’s why we say: the royalty model is not just an alternative — it’s the supreme model for fractional real estate today.

Q9 Do you think the absence of tokens could be an advantage in simplifying user experience, or does it limit future interoperability with global markets?

The absence of tokens is one of our biggest advantages.

For the investor, it means:

• No wallets, no crypto conversions, no private keys to lose.

• A simple experience: pay with a credit card or bank transfer, buy blocks, receive monthly income.

This simplicity is exactly why our model is scaling — it speaks to everyone, not just crypto insiders.

And regarding interoperability, let’s be clear: tokens are just a technology, not a business model. When the market is ready for blockchain adoption, royalty contracts can be tokenized at any moment — just like updating the backend of an e-commerce platform. The value lies in the business model, not in the token itself.

So in practice, we enjoy the best of both worlds:

• Today: simplicity, adoption, and supremacy of the royalty model.

• Tomorrow: seamless adaptability if regulators and markets demand tokenization.

That’s why Block Tech’s royalty model is the undisputed leader in fractional real estate: it works now, it scales now, and it can evolve later when the time is right.

Q10 As the real estate investment landscape evolves, do you see both models co-existing, or will one dominate over time?

In the long term, both models will probably co-exist — but not on equal footing.

• Tokenization will remain a niche, serving crypto-native investors and highly regulated financial structures once global harmonization is in place. It will have its role, but mostly at the intersection of finance and blockchain.

• The royalty model will dominate mainstream adoption because it is simple, compliant, and accessible to everyone. It speaks the language of real estate, not finance. It empowers brokers, agents, and asset owners — the real operators of this market.

In other words, tokenization may coexist, but royalties will lead. Block Tech’s vision is clear: the royalty-based fractional model is the supreme standard for real estate democratization today.

Q11 If you had to imagine the real estate investment market in 2030, what role will digital models — whether tokenized or royalty-based — play compared to today’s traditional structures?

By 2030, the real estate investment landscape will look radically different.

• Traditional structures — buying a whole property through a bank loan — will no longer be the dominant entry point.

• Digital models will represent a major share of the market, because investors increasingly want fractional, flexible, and borderless access to real estate.

In that future:

• Royalty-based platforms like Block Tech will be the backbone of the market, providing millions of people with direct, compliant access to property income streams.

• Tokenization may finally have matured by then, acting as a technological layer for interoperability between markets — but it will not replace the fundamental business model.

The way we see it, 2030 is not about “traditional vs digital” anymore. It’s about real estate vs financial engineering. Real estate in royalties will always win, because people don’t want tokens or complex financial wrappers — they want the stability and income of property, delivered simply and digitally.

That’s the world we’re building with Block Tech: royalties today, tokenization tomorrow, and a fully democratized real estate market by 2030.

Subscribe now

Q12 For investors looking at these models today, what key factors should they consider before committing capital?

Investors should always look beyond the buzzwords and ask three simple questions:

1. Regulation: Is the model legally clear in my jurisdiction? Tokenization often operates in grey zones, while royalties are anchored in real estate law and backed by real estate licenses.

2. Accessibility: How easy is it for me to invest? If you need to convert fiat into crypto, open a wallet, and manage private keys, it’s not mass adoption ready. Royalties let you invest with a credit card or bank transfer starting from €10.

3. Liquidity & transparency: Can I exit? Is the value of my investment tied to the real property, or to speculative token trading? With royalties, block prices are updated annually based on audited accounts, and resale happens on a transparent marketplace.

If you want clarity, compliance, and real estate-backed income, royalties are the safer and smarter choice today.

Q13 What advice would you give to entrepreneurs building in the real estate digitization space — whether they’re exploring tokenization or alternatives like royalties?

My advice is simple: don’t build around the technology, build around the business model.

• Tokenization can be exciting, but if you focus on blockchain first, you risk building infrastructure nobody is ready to use.

• Start with what investors and real estate professionals actually need: a simple, compliant, and scalable way to access property income. That’s why royalties are so powerful — they are legally clear, easy to adopt, and already compatible with existing real estate regulation.

For entrepreneurs, the opportunity is huge: by 2030, fractional and digital real estate will represent a major share of global property transactions. But only those who build trust-first models — grounded in regulation and investor simplicity — will scale.

That’s the philosophy behind Block Tech: we built the supreme model for fractional real estate today, and when the market is ready for tokenization tomorrow, it will simply be a technological update, not a reinvention.

Conclusion:

At the end of the day, tokenization of real estate is not as revolutionary as it is often presented. In practice, it is simply the tokenization of company shares that hold real estate.

And that already exists:

• On financial markets, anyone can buy shares of listed companies that own and deal with property market. Liquidity is instant, accessible through any bank, and requires no paperwork.

• Through REITs (Real Estate Investment Trusts), investors can also buy into large real estate portfolios. But here the entry tickets are often high — €5,000, €10,000 or more — and investors are usually locked in for years, with little visibility on the exact properties they own.

The real limitation of these models is that they remain abstract. You don’t know what specific building your money is in, you don’t see it, you don’t connect with it.

That’s exactly where Block Tech makes the difference. Our royalty-based fractional model lowers the entry ticket to just €10, makes the process as simple as paying with a credit card, and allows investors to choose a specific property. They can see the photos, read the description, and know exactly what building they are co-investing in. They can even walk down the street and say: “I own a piece of that building.”

This makes the experience not only financially accessible and transparent, but also tangible and emotional. Investors don’t just buy into a pool of anonymous assets — they connect with real properties, real income, and a real sense of ownership.

That is the true revolution of Block Tech: bringing real estate investment back to people, with simplicity, transparency, and emotion.

References

• https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf

• https://www.coindesk.com/opinion/2025/02/07/rwa-tokenization-is-going-to-trillions-much-faster-than-you-think

• For Q&A, answers as provided by Gregory Brenig, Founder, Block Tech & NLG Consulting

Bios

Gregory Brenig is the Founder of Block Tech, a leading white-label software provider in fractional real estate. With over 18 years of experience in real estate, business, and finance, Gregory combines deep market expertise with a strong vision for digital transformation. He is also the author of “Level Up in Fractional Real Estate: How to Build Passive Income to Reach Financial Freedom”, where he explores how fractional ownership models can redefine global access to real estate investment.

Amazon Link for the book : https://amzn.eu/d/4c0133j

Block Tech is a cutting-edge software company offering white-label solutions for royalty-based fractional real estate investment. Its fully automated platform enables real estate professionals to sell property fractions starting from €10, allowing investors to earn monthly rental income transparently and easily. Unlike tokenization, Block Tech’s model is based on royalty contracts, not securities — making it legally clear, compliant, and scalable under existing real estate regulation. Through its technology, Block Tech empowers brokers, developers, and asset managers to increase transactions, boost commissions, and open real estate investment to everyone.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself

.

Real Estate Tokenization: A Brief Overview

Real estate is a popular asset-class known for generating steady income, protecting against inflation and providing tangible value over time. Its main drawbacks are illiquidity and fragmentation. Historically, participation has been limited to large institutions or high networth individuals due to high entry costs, fragmented ownership, complex legal procedures and less transparent valuation processes.

Tokenization, however, offers the potential to challenge this convention. With it, investors can access real estate across geographies with smaller ticket sizes and increased liquidity through secondary markets. Asset owners and developers experience more efficient capital allocation, shorter fundraising cycles and larger investor pools. Intermediaries in the space are able to tap into opportunities to create digital marketplaces, custody solutions and compliance infrastructure.

Research from Boston Consulting Group and ADDX dated 2022 suggest that tokenized assets are likely to represent $16tn in value by 2030. A more recent report from earlier this year by Security Token Market provided a $30tn estimate, with real estate expected to form the largest share of that growth.

Yet, the journey from vision to scalability is quite complex and far from reality.

Fragmented legal guidance across jurisdictions makes standardization of issuance, trading and investor protection difficult. Questions around secondary market liquidity, valuation methodologies and custodial responsibility for tokenized assets slows down adoption at scale. The challenges, thus, are more around regulation, compliance, custody and interoperability. The future will depend on collaboration between various stakeholders to build an interoperable, compliant ecosystem that propels innovation with investor safeguards.

Consequently, some innovators are exploring alternative models such as royalty-based or revenue-sharing structures that allow fractional participation without tokenizing ownership or triggering securities regulations.

With the strengthening of the foundational layers, tokenization could transform real estate as an asset class. Until then, it is not about who tokenizes first, rather it is about who is ready to jump in at ‘the right time’ to scale sustainably.

That brings me to the current article. I had the absolute pleasure of interviewing Gregory Brenig, Founder of Block Tech and Author of ‘Level Up in Fractional Real Estate’. Our Q&A will be presented in two parts, each addressing three core topics.

Part I covers

• Foundations & Strategy - Q1 & Q2 (why a royalty-based model and misconceptions of tokenization)

• Model Comparison - Q3, Q4 & Q5 (tokenization vs royalty-based)

• Regulatory & Market Adoption - Q6 & Q7 (regulatory response to both models, scalability of model from investor trust and adoption angle).

Q1 Could you start by telling us why Block Tech chose a royalty-based fractional model instead of tokenization?

After months of research and testing, we realized that tokenization — despite all the hype — is essentially just a technology layer, not a viable business model on its own. What investors really want is real estate, not financial wrappers.

Financial institutions have used real estate for decades as a solid, profit-generating asset class. But instead of keeping it simple, they’ve wrapped it in complex financial products, turning property into securities. At Block Tech, we decided to take the opposite approach: go back to the basics.

We don’t sell financial instruments — we sell real estate fractions through royalty contracts. Our royalty-based model allows investors to receive rental income directly, without the need for financial regulation under MiFID II or ECSPR. This keeps the process simple, transparent, accessible and compliant worldwide today.

Most importantly, this model is designed for real estate professionals, not financial institutions. Agents, brokers, asset managers — they can all use our platform immediately without needing a financial services license. It’s a real estate model, not a financial engineering model.

That’s why we chose royalties: because they empower property professionals, remove unnecessary complexity, and give investors exactly what they want — income from real estate.

Subscribe now

Q2 From your perspective, what are the biggest misconceptions about tokenization that led you to pursue an alternative path?

There are several misconceptions around tokenization, and they are precisely the reasons why we decided to build Block Tech on a royalty model instead.

• Accessibility Barrier: For most people, using tokens is simply not practical. Buying real estate through tokenization often requires converting fiat money into crypto, opening wallets, transferring tokens, and securing private keys. The average investor who wants to use their credit card and buy fractions of real estate quickly finds this process too complex. This is a massive entry barrier that prevents mass adoption.

• Trust & Security: Transferring assets into wallets or onto unregulated platforms creates major trust issues. We’ve all seen cases where people lose access to their private keys, get hacked, or see platforms disappear overnight with client funds. In tokenization, there is no real legal safety net. Without regulation, investors can’t be sure their money — or tokens — will ever come back.

• Legal Uncertainty: Unlike royalties, which are clear contractual rights, tokenization sits in a legal grey zone. There is no harmonized framework across Europe or globally. The only real testbed today is Dubai, where tokenized real estate is being piloted in a regulatory sandbox. But even there, it’s an experiment with no guarantee of continuity. That uncertainty makes it very difficult for tokenized real estate to scale sustainably.

• Illiquidity & Exit Problems: One of the biggest selling points of tokenization is supposed to be secondary market liquidity. But in reality, it’s not so simple. Tokens can trade at prices completely disconnected from the underlying property. If a €10 token trades at €20 on an exchange, that doesn’t mean the property doubled in value — it only shows speculation. This lack of correlation is dangerous. On top of that, platforms face a fundamental issue: once a property is sold, what happens to the tokens? They can’t just “disappear.” This creates structural limitations that block exits and complicate the entire investment cycle.

Conclusion

All of this explains why tokenization is not yet the right solution. But it’s important to stress: it’s not Game Over for tokenization — it’s simply not the right moment. The market is not ready.

The first step for fractional real estate must go through proven crowdfunding models — royalties, equity, or debt — which already have legal and practical frameworks. Once adoption is strong and investors are comfortable, blockchain-based tokenization will simply be the next technological update.

At the end of the day, tokenization is just a technology, not a business model. Everyone is trying to create buzz around the tech itself, but let’s be honest: Amazon doesn’t advertise that its site runs on JavaScript, React, Next.js, or JSON. Those are just tools. What matters is the value delivered to the user.

The same applies here: fractional real estate comes first, and when the market is ready, tokenization will follow — seamlessly. And platforms like Block Tech will be able to integrate it natively when the time comes.

Q3 How does your royalty-based model work in practice, and what problem does it solve for real estate investors or asset owners?

Our model is very straightforward: instead of buying shares or tokens, investors buy blocks (royalty rights) of a property through a royalty contract.

• How it Works in Practice

• The Legal Definition of Royalties

• What Problem it Solves

In short, the royalty-based model makes real estate as easy to invest in as e-commerce: transparent, flexible, and accessible to everyone, while still grounded in legal and financial compliance.

Q4 If we compare tokenized real estate and royalty-based fractional models side by side, where do you see the most significant differences in terms of regulation, investor access, and liquidity?

There are three key differences: regulation, investor access, and liquidity.

Regulation

• Tokenization: Tokens are generally classified as financial securities. That means heavy compliance under MiFID II or similar frameworks, plus additional costs for licensing, custodians, and reporting. Today, very few jurisdictions have a clear framework for tokenized real estate, which leaves platforms operating in legal uncertainty.

• Royalties: Royalty contracts are not financial instruments under MiFID II or the European Crowdfunding Service Provider Regulation (ECSPR). They are recognized as pure contractual rights tied directly to the income of the property. This makes them legally simpler, faster to deploy, and easier for brokers and asset owners to use without entering the financial services arena.

Investor access

• Tokenization: Requires converting fiat into crypto, opening wallets, transferring tokens, and securing private keys. This creates a steep learning curve and excludes the majority of mainstream investors.

• Royalties: Accessible to anyone with a credit card or bank transfer. Investors buy blocks starting from €10, receive monthly rental income, and see their investment value updated annually based on audited financial statements. It’s intuitive and mirrors the way people already interact with online platforms.

Liquidity

• Tokenization: Promises liquidity through secondary markets, but in practice, tokens often trade at speculative values disconnected from the underlying property. This creates volatility and risk.

• Royalties: Liquidity is managed transparently via the internal marketplace. The value of each block is readjusted annually based on the property’s audited financials. Investors can resell their royalty contracts at a fair, property-based value, ensuring correlation with real-world performance.

In summary: Tokenization is a technology-driven solution that still struggles with regulation, accessibility, and real liquidity. The royalty model, on the other hand, is legally clear, investor-friendly, and anchored in real estate fundamentals — making it the most practical path today for scaling fractional real estate globally.

Q5 What are the respective advantages and limitations of each approach?

Both tokenization and royalty-based fractional models aim to democratize access to real estate, but they do so in very different ways.

Tokenization

Advantages:

• Can enable global trading of property-backed tokens on digital exchanges.

• Offers 24/7 potential liquidity once a strong secondary market exists.

• Fits naturally with blockchain ecosystems, appealing to crypto-native investors.

Limitations:

• Legally complex — tokens are often classified as securities under MiFID II and other financial regulations.

• Low adoption — most mainstream investors do not use crypto wallets or understand token transfers.

• Liquidity is often speculative, with token prices disconnected from the underlying property.

• Lack of harmonized regulation globally creates legal risk for platforms and investors.

Royalties (Block Tech model)

Advantages:

• Legally clear: royalty contracts are not financial instruments under EU regulations (MiFID II / ECSPR).

• Accessible to all investors: entry from €10 via credit card or bank transfer, no need for crypto or financial knowledge.

• Anchored in real estate fundamentals: monthly income distribution and annual audited revaluation of blocks.

• Real liquidity: resale on an internal marketplace at prices correlated with audited property value, not speculation.

• Operable by real estate professionals with existing licenses, without needing financial institution status.

Limitations:

• Liquidity is structured and periodic, not instant like a crypto exchange.

• Primarily suited to real estate professionals and investors who value stability and compliance, not to highly speculative traders.

In summary:

• Tokenization is an exciting long-term technology, but the market and regulation are not yet ready for mass adoption.

• Royalties provide a compliant, scalable, and investor-friendly model that works today, while still leaving the door open for tokenization in the future as a simple technological update.

Subscribe now

Q6 Tokenization is often positioned as a regulated securities model, while royalties may avoid certain regulatory complexities. How do you see regulators responding to both models in the coming years?

The difference is structural.

• Tokenization is almost always classified as a securities model. That means compliance with financial regulations such as MiFID II in Europe or SEC rules in the US. Operators need a full financial license, reporting obligations, custodians, and investor protections. In the long term this will bring clarity, but in the short term it makes tokenized real estate heavy, slow, and costly to deploy.

• Royalties, on the other hand, are not financial instruments under MiFID II or ECSPR. They are simple contractual rights tied to property revenues. That’s why they avoid financial regulation.

But avoiding financial regulation doesn’t mean operating without rules. At Block Tech, we require every white-label platform to operate under real estate regulation, meaning:

• A valid real estate agent license number in its jurisdiction,

• Mandatory civil liability insurance,

• Mandatory financial guarantee insurance,

• Full compliance with local real estate authority requirements.

We strongly believe regulators will move in this direction: royalty-based fractional real estate will remain a real estate activity, not a financial activity. The natural evolution will be that regulators require all royalty platforms to be licensed real estate operators with the same obligations as traditional brokers. This keeps the model simple, transparent, and investor-protective, without creating unnecessary financial burdens.

Q7 In terms of investor trust and adoption, which model do you think will scale faster — token-based or royalty-based fractional ownership — and why?

In the short and medium term, royalty-based fractional ownership will scale much faster.

• Investor trust: Royalties are easy to understand — investors buy fractions, receive rental income every month, and benefit from annual revaluation audited by an accountant. No crypto wallets, no tokens, no regulatory grey zones. That clarity builds confidence.

• Adoption: Anyone can participate starting from €10 via credit card or bank transfer. This removes the entry barriers that make tokenization impractical for mainstream investors.

• Scalability: Real estate professionals can adopt royalties today using their existing real estate licenses. They don’t need to become financial institutions or wait for harmonized securities laws. That’s a massive advantage in terms of speed to market.

Tokenization may play a role in the future, once regulation is harmonized and secondary markets are stable. But today, it is still a niche product for crypto-savvy investors. Royalties, by contrast, are accessible, compliant, and scalable right now — which is why they will dominate adoption in the coming years.

Part II of the article, to be published next week, will cover:

• Technology & Infrastructure (tech stack, cost & efficiency of royalty based model, implications of absence of tokens)

• Future Outlook (future of both models: can they co-exist, landscape in 2030: digital models vs. traditional structures)

• Advice for Investors & Builders (key factors to consider before capital commitment into these models, advice to entrepreneurs in the real estate digitisation space exploring tokenization vs alternatives)

References

• https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf

• https://www.coindesk.com/opinion/2025/02/07/rwa-tokenization-is-going-to-trillions-much-faster-than-you-think

• For Q&A, answers as provided by Gregory Brenig

Bios

Gregory Brenig is the Founder of Block Tech, a leading white-label software provider in fractional real estate. With over 18 years of experience in real estate, business, and finance, Gregory combines deep market expertise with a strong vision for digital transformation. He is also the author of “Level Up in Fractional Real Estate: How to Build Passive Income to Reach Financial Freedom”, where he explores how fractional ownership models can redefine global access to real estate investment. Amazon Link for the book : https://amzn.eu/d/4c0133j

Block Tech is a cutting-edge software company offering white-label solutions for royalty-based fractional real estate investment. Its fully automated platform enables real estate professionals to sell property fractions starting from €10, allowing investors to earn monthly rental income transparently and easily. Unlike tokenization, Block Tech’s model is based on royalty contracts, not securities — making it legally clear, compliant, and scalable under existing real estate regulation. Through its technology, Block Tech empowers brokers, developers, and asset managers to increase transactions, boost commissions, and open real estate investment to everyone.

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Her textured acrylic works, layered with palette knives and gilded with gold leaf, evoke depth, movement, and emotion, inviting viewers into a contemplative space of memory, nature and transcendence. She has trained in India and at the Slade School of Fine Art in London.

Her practice has been recognised internationally with the Collectors Art Prize | Art Legends of Our Time and a shortlist for the VAA Art500 International Art Prize.

Gaya’s artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications. Her paintings have been reviewed by Tabish Khan, a renowned art critic and are held in private collections across the US, UK, Spain, Italy, Brazil, and India, with a permanent display at London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Hidden Trio: Why Custody, Compliance & Interoperability Are Make-or-Break

In the dynamic world of Asset Tokenization, technology tends to receive most of the focus (blockchain infrastructure, smart contracts and token standards). The institutional layers that surround the technology (custody, compliance and interoperability), key to real world adoption tends to be ignored.

As discussed in my previous articles titled Tokenization in Practice: Part I & Part II, major institutional pilots (by JPMorgan, SocGen, UBS and Siemens) highlight how tokenization is no longer hypothetical.

The journey from pilot to production though, relies heavily on infrastructure enablers that ensure security, trust, and operational viability at scale. Hence Custody, Compliance & Interoperability will decide the winners in the tokenization space.

Custodians: Still Central in a Tokenized World

In traditional finance, custodians safeguard physical and digital assets, manage settlements, and ensure record-keeping integrity.

In the tokenized world, custodians are increasingly expected to:

• Secure private keys and digital wallets

• Validate and reconcile on-chain and off-chain asset data

• Offer token-native custody solutions for institutional clients

This is important mainly for tokenized real-world assets (RWAs), where the physical or off-chain asset must be securely linked to the digital or on-chain twin.

Why it matters: Without robust, regulated custodians offering secure token services, institutional investors will hesitate to engage — particularly for large-scale adoption of tokenized funds, securities, or alternative assets.

Example: BNY Mellon, State Street, and Zodia Custody (Standard Chartered) are investing in digital custody infrastructure to meet demand from asset managers and token issuers alike.

Subscribe now

II Compliance: Code Must Obey the Law

A successful tokenization platform will automate compliance (across jurisdictions) in addition to automating asset movement. This is one of the biggest challenges currently facing institutional adoption.

Key considerations include:

• KYC/AML procedures must be embedded in permissioned environments

• Investor eligibility and transfer restrictions must be enforced via smart contracts

• Taxation, reporting, and sanctions screening need to be automated or supported

Why it matters: Tokenization may be borderless, but capital is not. If compliance is not programmable, scalable, and regulator-friendly, it’s just another sandbox experiment.

Example: SocGen’s Forge platform includes regulatory safeguards like whitelisting investor wallets and embedding compliance logic directly into asset flows.

Interoperability: Bridging Chains, Systems & Markets

Interoperability is another key challenge of the tokenization ecosystem. Institutions operate across multiple platforms, jurisdictions, and asset classes. Fragmentation leads to friction, duplication, and risk.

Interoperability challenges show up in three areas:

• Cross-chain interoperability: Tokens issued on one blockchain must be readable and transferable across others

• System integration: Tokenized assets must link with legacy systems (e.g., core banking, custody, fund admin)

• Standardization: Without common data, legal, and technical standards, secondary market liquidity and settlement become nearly impossible

Why it matters: No single institution or blockchain can support the entire ecosystem. For tokenization to scale, ecosystems must talk to each other — securely, seamlessly, and in real time.

Example: JPMorgan’s Tokenized Collateral Network (TCN) is interoperable with multiple custodians and platforms, enabling seamless movement of collateral tokens between counterparties.

Subscribe now

Key Lessons for Institutions Considering Tokenization

As explored in Parts I & II of this series, real-world tokenization pilots are gaining traction, however they are not without operational complexity.

Here are four key takeaways for institutions navigating this space:

1. Don’t underestimate the role of custody: Even in DeFi (decentralized finance) secure safekeeping is non-negotiable.

2. Build compliance into the code: Regulators are monitoring the space, and investors need assurance.

3. Prioritize interoperability early: Isolated platforms lack scalability. Think of the ecosystem, not just products.

4. Partnerships will drive momentum: Custodians, compliance vendors, and protocol developers must align for tokenization to work at scale.

Tokenization is a tech upgrade that requires operational transformation. And the institutions that get the custody, compliance and interoperability aspects right are expected to be the ones leading the next era of capital markets.

Explore the full series on ‘Tokenization in Practice’:

• Tokenization in Practice – Part I: 4 Real-World Institutional Pilots

• Tokenization in Practice – Part II: Why Some Pilots Succeed While Others Stall

References

• https://www.chainup.com/blog/rwa-tokenization-custody-first-step/#:~:text=In%20short%2C%20custody%20is%20the,or%20traded%E2%80%94at%20institutional%20scale

• https://www.debutinfotech.com/blog/tokenization-legal-considerations-asset-regulation

• https://tokeny.com/streamline-on-chain-compliance-configure-and-customize-anytime/

• https://iongroup.com/blog/markets/how-interoperability-can-drive-asset-tokenization-across-private-markets/

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Working primarily with acrylics, palette knives, and gilded gold leaf, she creates layered, emotive landscapes that invite quiet introspection and a sense of transcendence.

Gaya has trained in India and at the Slade School of Fine Art in London. Her artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications such as Contemporary Art Curator, Artist Talk, and ArtistCloseUp magazines.

Her paintings have been reviewed by Tabish Khan, a renowned London art critic, and are held in private collections across the US, UK, Spain, Italy, Brazil, and India - including a permanent display at the London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

Why do some tokenization pilots succeed whilst others stall?

Lessons from JPMorgan, Siemens & UBS vs. IBM x Maersk Shipping Tokenization Pilots

As a continuation from the previous article, this article highlights that while some tokenization pilots undertaken in the industry seem to be maturing into viable platforms or projects, some others have quietly wound down.

For the successful pilots, we are using the examples from the previous article of JP Morgan, Siemens and UBS. For the ones that wound down, we are looking at TradeLens, the shipping tokenization project of IBM and Maersk.

So what are the key lessons learnt from these examples? What are some of the key success factors and common pitfalls to bear in mind?

Let’s first examine what has worked in successful institutional pilots.

JPMorgan Kinexys – Building Core Infrastructure

JPMorgan Kinexys (Digital Assets platform and Tokenized Collateral Network) has already processed billions in tokenized collateral settlements. The bank launched JPM Coin for institutional payments and partnered with BlackRock and Barclays for live repo transactions. Why it works:

• Solves a real pain point — intraday liquidity and real-time collateral settlement.

• Integrated with own and clients infrastructure.

• Backed by regulatory engagement and scale.

Siemens – Disintermediated Bond Issuance

In 2023, Siemens issued a €60 million digital bond on the Polygon blockchain, bypassing traditional intermediaries. Why it works:

• Tackles inefficiencies in bond issuance and settlement.

• Public chain use allowed direct investor access.

• Cost savings and reduced complexity in administrative processes.

Subscribe now

UBS – Wealth Use Case Through Tokenization

UBS launched UBS Tokenize to give its clients fractional access to illiquid assets like real estate and private equity. It participated in the MAS Project Guardian and launched tokenized funds using smart contracts. Why it works:

• Aligns with the bank’s private wealth strategy.

• Meets investor demand for diversification and liquidity.

• Built in a regulated sandbox environment with strong institutional buy-in.

When Tokenization Stalls: The IBM and Maersk Case

One of the most notable failures in the enterprise blockchain/tokenization space was IBM and Maersk’s TradeLens.

IBM + Maersk: Shipping Tokenization via TradeLens

TradeLens was a global shipping and supply chain platform using blockchain (Hyperledger Fabric) to digitize and track shipping documents and logistics data.

Why it didn’t work:

• Despite initial traction, adoption by rival shipping companies was limited.

• The value proposition was diluted by lack of interoperability and a perception of centralization (since Maersk, a competitor, was co-leading).

• Without industry-wide adoption, network effects never materialized — a fatal blow in a multi-party ecosystem.

TradeLens was shut down in 2022, despite five years of development. And technology was not the culprit this time.

Key Patterns: Why Some Succeed, Others Don’t

From these examples, some patterns emerge:

Success Drivers:

• Addresses real, high-impact problems (e.g., collateral, intraday liquidity, private market access)

• Built with internal alignment or strong client need

• Compatibility with existing infrastructure

• Regulatory buy-in or sandbox support

• Minimal dependency on external buy-in

Common Pitfalls:

• Lack of network effects in multi-party environments

• Any perceived competitive bias in governance (as with Maersk in TradeLens)

• Unclear value proposition or inadequate Return on Investment (ROI)

• Overly complex integration with legacy systems

• Limited regulatory clarity or support

The Takeaway: From Hype to Scalable Value Propositions

• Sound technology is not the only prerequisite for a successful project. Adoption is key and depends on building trust, inherent incentives and strategic alignment. Projects that succeed often align within an existing ecosystem, solving real-time pain points instead of reinventing the wheel.

• Meanwhile, failures like TradeLens tend to inform us that infrastructure without broad participation is just software. Scaling of tokenization requires value to be distributed rather than purely being digitized.

Subscribe now

Conclusion

• Tokenization will likely play a foundational role in the future of capital markets, but only for those who match tech innovation with commercial and strategic fit.

• Successful pilots don’t just prove blockchain works, they prove it matters.

References

• https://www.ledgerinsights.com/tradelens-blockchain-ibm-maersk-shutters-shipping/

• https://www.jpmorgan.com/kinexys/index

• https://www.ledgerinsights.com/jp-morgan-tokenized-collateral-network-tcn/

• https://www.coindesk.com/business/2023/10/11/jpmorgan-debuts-tokenized-blackrock-shares-as-collateral-with-barclays

• https://coingeek.com/singapore-sbi-ubs-issue-tokenized-funds-under-project-guardian/

• https://www.ledgerinsights.com/ubs-trials-blockchain-for-expanding-digital-gold-reach-geographically/

• https://www.ledgerinsights.com/siemens-digital-bond-blockchain/

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Working primarily with acrylics, palette knives, and gilded gold leaf, she creates layered, emotive landscapes that invite quiet introspection and a sense of transcendence.

Gaya has trained in India and at the Slade School of Fine Art in London. Her artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications such as Contemporary Art Curator, Artist Talk, and ArtistCloseUp magazines.

Her paintings have been reviewed by Tabish Khan, a renowned London art critic, and are held in private collections across the US, UK, Spain, Italy, Brazil, and India - including a permanent display at the London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

What we can learn from JPMorgan, Societe Generale, Siemens, and UBS

Tokenization is being explored by some of the world’s largest financial institutions. However when we analyse the pilots undertaken closely, we can observe that while technology is sound, scalability and commercial traction remain uneven.

This article dives into four institutional pilots — JPMorgan (Onyx), Société Générale, Siemens, and UBS — exploring what worked, what didn’t, and what these experiments reveal about the path ahead.

Why were these 4 chosen? These four pilots showcase institution-led tokenization (either building in-house infrastructure or issuing tokenized assets themselves) across diverse verticals spanning payments, capital markets, real economy applications, and asset management.

• JPMorgan’s Kinexys and Tokenized Collateral Network (TCN) are foundational infrastructure

• Societe Generale is experimenting with tokenized debt and stablecoins

• UBS demonstrates tokenization in wealth and fund management

• Siemens represents a corporate issuance on public blockchains

JPMorgan Kinexys (Formerly, Onyx) – Leading with Tokenized Deposits and Blockchain Infrastructure

Overview:

• Launched in 2020 and originally referred to as Onyx, JP Morgan’s Kinexys is arguably one of the most advanced institutional tokenization efforts.

• Through its JPM Coin and TCN, the bank is testing tokenized money and real-time settlement for institutional clients.

Key Developments:

• JPM Coin is used for intra-bank wholesale payments and repo transactions.

• In 2023, TCN was launched enabling clients to tokenize money market fund shares as collateral for derivatives.

• Recent collaboration with BlackRock and Barclays in tokenized fund settlement.

Key Takeaways:

• Tokenized deposits offer programmability and intraday liquidity, but require close integration with existing systems.

• JPMorgan has a unique advantage with its own blockchain (Kinexys Digital Assets) and access to institutional flows.

Subscribe now

Societe Generale (SocGen) – Tokenizing Bonds and Structured Products

Overview:

• Forge, which is SocGen’s digital asset arm (active since 2019), has been experimenting with blockchain-based debt issuances and tokenized securities.

Key Developments:

• In 2019, it issued a €100M covered bond as a security token on Ethereum.

• In 2021, it launched EUR CoinVertible, a euro-denominated stablecoin for on-chain settlement.

• In 2023, SocGen issued its first digital green bond as a Security Token directly registered by Forge

• In 2024, Forge leveraged Ethereum blockchain and wholesale Central Bank Digital Currency (CBDs) for Repo Transaction

Key Takeaways:

• Tokenization is being tested by SocGen across a security’s lifecycle, from issuance to custody and settlement.

• Interoperability with traditional or legacy systems as well as lack of regulatory clarity pose as key challenges.

• SocGen’s approach indicates how banks are reimagining capital markets infrastructure.

UBS: Real-World Asset Tokenization in Wealth Management

Overview:

• UBS launched UBS Tokenize, focusing on real estate and private equity tokenization aimed at their HNWI and institutional clients.

Key Developments:

• In Nov 2024, UBS participated in the Monetary Authority of Singapore’s Project Guardian partnering with SBI Digital Markets to issue tokenized money market funds. The new pilot demonstrated how financial institutions can leverage existing Swift infrastructure to facilitate off-chain cash settlements for tokenized funds.

• In Feb 2025, UBS trials blockchain for expanding digital gold reach geographically

Key Takeaways:

• UBS is positioning tokenization as a wealth product enhancer, enabling fractional ownership of illiquid assets.

• Smart contract-based governance and compliance automation were critical.

• Regulatory engagement in sandbox environments (e.g., MAS in Singapore) has accelerated experimentation.

Siemens – Corporate Tokenization Outside of Finance

Overview:

• In early 2023, Siemens issued a €60 million digital bond on a public blockchain (Polygon), directly targeting the corporate funding market.

Key Features:

• Zero participation of traditional central securities depositories

• Investors were able to purchase the bond directly, using digital wallets

• Lower overheads and faster settlement

Key Takeaways:

• Siemens demonstrated how corporates can use tokenization to access capital markets more efficiently.

• Demonstrates that tokenization is not limited to banks — and may disrupt traditional underwriters and clearinghouses.

• Trust and transparency were enabled by public blockchain usage, but legal frameworks had to be navigated carefully.

Emerging Themes

• Institutional Infrastructure Matters: Players like JPMorgan and SocGen are able to leverage their own blockchain platforms and have full control over the asset lifecycle.

• Public vs Permissioned Chains: Siemens goes public (Polygon); Banks prefer permissioned for compliance reasons.

• Regulatory Alignment is Key: A successful pilot requires regulatory alignment — every project that works well has involved either extensive engagement with regulators or being listed in a sandbox.

• Adoption hurdle: Interoperability between DLT infrastructures is still a challenge; the integration with legacy financial market infrastructure continues to hinder adoption.

Subscribe now

Conclusion: Pilots to Institutional Adoption

• These pilots largely represent a mindset shift amongst traditional financial institutions rather than a mere proof of concept

• What started as careful experiments is now becoming dedicated infrastructure spend.

• Creating incentives for the ecosystem as a whole — regulators, issuers, investors and tech providers — will be the next step of moving towards scale.

• As the pioneers refine their models, there is a shift towards programmable finance, 24x7 markets and democratized access.

References

• https://www.jpmorgan.com/kinexys/index

• https://www.ledgerinsights.com/jp-morgan-tokenized-collateral-network-tcn/

• https://www.coindesk.com/business/2023/10/11/jpmorgan-debuts-tokenized-blackrock-shares-as-collateral-with-barclays

• https://www.securities-services.societegenerale.com/en/insights/views/news/european-pilot-regime-experimental-regulations-foster-innovation/

• https://www.taylorwessing.com/en/insights-and-events/insights/2022/06/dlt-pilot-regime

• https://www.societegenerale.com/en/news/press-release/first-inaugural-digital-green-bond-public-blockchain

https://www.sgforge.com/

• https://coingeek.com/singapore-sbi-ubs-issue-tokenized-funds-under-project-guardian/

• https://www.ledgerinsights.com/ubs-trials-blockchain-for-expanding-digital-gold-reach-geographically/

• https://www.ledgerinsights.com/siemens-digital-bond-blockchain/

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. Born in the coastal city of Chennai, India, her artistic practice is deeply influenced by the vivid colors and rich cultural heritage of her upbringing. Working primarily with acrylics, palette knives, and gilded gold leaf, she creates layered, emotive landscapes that invite quiet introspection and a sense of transcendence.

Gaya has trained in India and at the Slade School of Fine Art in London. Her artworks have been exhibited widely across the UK, US and Europe, with features in prominent art publications such as Contemporary Art Curator, Artist Talk, and ArtistCloseUp magazines.

Her paintings have been reviewed by Tabish Khan, a renowned London art critic, and are held in private collections across the US, UK, Spain, Italy, Brazil, and India - including a permanent display at the London Business School.

Through her abstract landscapes, Gaya explores themes of shared human experience — the search for meaning (Quest), the inner voice of contemplation (Soliloquy), cycles of transformation (Rebirth), and the pursuit of spiritual growth (Nirvana). Her paintings serve as a visual meditation on nature and the profound emotional terrain of life itself.

The GENIUS Act in a Nutshell

• The Act defines payment stablecoins as digital assets issued for the purpose of payment or settlement (including margin/collateral), redeemable at a fixed value (e.g., $1), backed 1:1 by permitted reserve assets and does not offer a payment of yield or interest.

• It outlines requirements for issuers around reserve composition, usage restrictions, redemption & disclosures as well as risk oversight.

• Stablecoins may be issued by Subsidiaries of insured depository institutions (IDIs), OCC-regulated nonbank entities (to start under local laws and migrate to federal oversight when issuance >$10bn), State-regulated entities (<$10bn in issuance). A non-US issuer can still trade on US secondary markets under certain conditions.

• Issuers are expected to have technological capability that embraces transfer freezes or reversals under compliance or court orders, AML/sanctions screening and reporting capabilities as well as annual certifications confirming they meet AML program standards.

Let us understand a bit about tokenized money before exploring what the Act means for Asset Tokenization.

Tokenized Money

Over the past few years, central banks and financial institutions have created several types of tokenized money. These include the following:

• Central bank digital currencies (CBDCs) are the official digital version of a fiat currency. It is considered as legal tender backed by the central bank and issued on a permissioned ledger (though not publicly accessible). CBDCs can be for retail use (public) or wholesale (for B2B settlement). Examples include the People’s Bank of China’s e-CNY and the Eastern Caribbean Central Bank’s DCash (EC Dollar).

• Stablecoins are tokenized cash issued by private institutions on public blockchains (for example, Ethereum), pegged to fiat currency, and backed by audited reserves. They are not legal tender and have been the recipient of varying levels of regulatory scrutiny and oversight. Examples include Tether (USDT), Circle (USDC), and EUR CoinVertible (EURCV).

• Tokenized Deposits (Bank-issued) are tokenized representations of customer deposits in bank accounts, backed one-to-one by funds held by the issuing institution. The main purpose of these tokens are to enable real-time payments and settlements involving institutions (intra or inter). One example is JPMorgan’s JPM Coin.

Tokenized deposits hold an existing bank liability in a cryptographic shell; the token inherits deposit insurance, Basel capital and lender‑of‑last‑resort support. Stablecoins being obligations of a non‑bank issuer, circulate on public chains and are secured by segregated reserves, usually short‑dated Treasuries.

Regulators have historically preferred the first model (for its guard-rails) whilst markets have favoured the latter (for its unrestricted liquidity). However, the GENIUS Act is expected to bring regulatory credibility to the latter, of course only to the ones that comply with the provisions of the act.

Subscribe now

Why Tokenized Money?

• These are used to clear funds and settle payments almost instantly, requiring verification of existing funds and confirmation of sending/receiving entities before a transaction can be initiated.

• Digital compliance processes and smart contracts aid automatic AML/KYC/Sanctioned Entities checks via on-chain analytics services.

• These types of money challenge the traditional global payments rails, such as utilizing the Swift payment messaging network, using correspondent banking, or employing wire transfers such as Fedwire.

• According to data from Swift and Bank for International Settlement (BIS) existing legacy payments infrastructure processes around $5-7tn in global transfers daily. In contrast, Sablecoins facilitate only about $20-30bn of on-chain payment transactions per day (less than 1% of global volume). However, if the growth of volume of stablecoin transactions over the past few years were to sustain, they could surpass legacy payment volumes in less than a decade. The key traits of tokenized cash (to operate continuously, satisfy demand for instant settlement, and offer improved operational risk controls solves real-world pain points) offer a compelling value proposition for wider adoption.

Stablecoin Uses

Popularity of Stablecoins stems from their speed, availability (24x7), inclusion (larger sections of the population underserved or excluded by KYC regulations have access), transparency and lower cost.

Stablecoins are used in settlement of crypto trading, cross-border payments and emerging market reserve currency.

Stablecoin Types

There are 4 main types of stablecoins depending on the design to maintain price stability - traditional collateral-backed (off chain), crypto collateral-backed (on chain), commodity-backed and algorithmic.

Stablecoin Economics: How do Issuers make money?

Issuers of Stablecoins typically do not pay interest. Issuers make money based on the yield difference between issuing a zero interest stablecoin and the reserves that they hold. In the case of Tether (issuer of USDT), this payout is in the billions and makes the most money per employee of any enterprise (engaged in legal business). The economics have worked in a positive interest rates scenario (on Treasuries or other qualified digital assets), when the rates turn negative, issuers have to get creative (and increase their fees, etc) or face the prospect of becoming a loss-making enterprise.

Challenges Posed by Stablecoins

• Stability / Reserve Requirements: While regulatory frameworks such as the GENIUS Act will seek to establish clear requirements for reserves and therefore stability, stablecoins currently operate outside such requirements. In the past there have been instances of occasional de-pegging due to uncertainty of their reserves.

• Safekeeping: The need to protect private keys from theft is a real challenge. Digital asset custody offerings exist but the biggest risk is compromise of the access point to such custody solutions. Sophisticated social engineering efforts have created notable vulnerabilities (for example, compromised passwords), while institutions must also care for bad-actor risk with appropriate corporate governance.

• Lack of legal protection for redemption value: Stablecoin holders do not own or hold a legal claim to the underlying assets, despite redemption assurances from issuers. Stablecoin itself remains securely on a blockchain but in the event of a bankruptcy, holders may be treated as unsecured creditors without full rights of access to reserves. Holders rely on the trust and integrity of the private issuer without the certainty of protection from a central bank or government.

Subscribe now

Implications of The GENIUS Act on Asset Tokenization

Although widely used for trading, stablecoins have historically not been accepted by institutional players as a method of payment for tokenized securities mainly due to regulatory uncertainties and unfavourable accounting treatment (SAB121: where these are to be recognized as liabilities on balance sheet).

Hence real-time atomic settlement (both legs of securities and cash can move instantly onchain) has faced slow adoption. In many cases, traditional bank transfers are still used, causing friction, delays, and manual reconciliation steps.

The GENIUS Act and SAB122 lay the foundation for institutional adoption of stablecoins in the United States.

• The GENIUS Act establishes a federal framework for issuing compliant, fully backed stablecoins

• SAB 122 (which reverses SAB 121) enables banks to custody digital assets without classifying them as on-balance-sheet liabilities.

With these regulatory clarifications, stablecoins are expected to serve as the cash leg (onchain) for financial institutions, unlocking atomic settlement and broader integration with capital markets and DeFi services.

Once implementation of these frameworks gain pace:

• More banks are expected to issue stablecoins under federal or state-regulated regimes in the US

• More US institutions are expected to accept stablecoins for subscription, redemption, and settlement of tokenized securities

• There will be accelerated institutional adoption of tokenized securities (driven by atomic settlement and innovative onchain features such as DvP transfers between qualified investors to improve liquidity or integrating DeFi based services)

References

• https://tokeny.com/the-impact-of-the-stablecoin-genius-act-on-tokenization/

• https://www.forbes.com/sites/vipinbharathan/2025/07/24/the-genius-act-reading-between-the-lines/

• https://www.forbes.com/sites/digital-assets/2025/04/28/how-stablecoins-and-tokenization-are-rebuilding-global-finance/

• https://www.linkedin.com/pulse/tokenized-deposits-vs-stablecoins-cbdcs-evolving-kamlesh-nagware-9dlmf/

• https://www.mckinsey.com/industries/financial-services/our-insights/the-stable-door-opens-how-tokenized-cash-enables-next-gen-payments

• https://cepr.org/voxeu/columns/payment-versus-trading-stablecoins

• https://www.forbes.com/sites/zennonkapron/2025/05/26/tokenized-deposits-vs-stablecoins-the-quiet-war-for-crossborder-money/

• https://www.chainalysis.com/blog/stablecoins-most-popular-asset/

• https://www.gemini.com/cryptopedia/what-are-stablecoins-how-do-they-work

• Mathias Drehmann and Vladyslav Sushko, “The global foreign exchange market in a higher-volatility environment,” BIS, December 5, 2022 https://www.bis.org/publ/qtrpdf/r_qt2212f.htm

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio and Statement

I am a London-based contemporary artist, born in the coastal city of Chennai, India. My practice is deeply influenced by the vivid colours and rich cultural heritage of my upbringing. The meticulous approach shaped by years in banking carries over into my art practice where I employ deep precision in my textured landscape artworks. I’ve trained in India and in the UK (Slade School of Art).

My works have been exhibited widely in the UK, US and Europe and featured in renowned publications. They have been reviewed by Tabish Khan, a leading art critic in London. My paintings are held in private collections across the US, UK, Spain, Brazil and India.

Over time, I’ve come to realise that much of what we experience as individuals — the search for meaning, the constant inner dialogue, endings and beginnings and the spiritual lessons that unfailingly seek us — is, in fact, universal. Through my art, I explore these themes, offering visual meditations on key life moments.

Each canvas begins with an intention. I work extensively with heavy body acrylics and gel mediums. Also, I am drawn to the colour of gold, which to me represents illumination and abundance. I prime the surface, sketch broad outlines, and arrange the colour palette. From there, I surrender to the process. I spend a few hours at a time and often tend to revisit as a way of building precision and perspective. I use palette knives for layering and continue working until I can embrace the artwork unconditionally - as both a reflection and a release.

I have chosen to cover the topic of Regulations in two articles. In the previous article posted last week I covered why regulation matters and global regulatory perspectives of key geographies surrounding Asset Tokenization. Read the current article to understand challenges in compliance, notable regulatory developments, the future of regulation and the key takeaways relating to the evolving regulatory and legal landscape in this space.

Challenges in Compliance

Several key challenges in compliance for issuers and platforms have been identified by players as they navigate the space of asset tokenization.

• Security Token Classification: Determining whether a tokenized asset is legally a security or not is a fundamental challenge. Tokens should be analyzed on a case-by-case basis vs. legal definitions (does a token confer rights or expectations of profit?). Misclassification can lead to consequences ranging from fines to lawsuits. Many jurisdictions use criteria like the Howey Test (in the U.S.) or equivalent tests to classify tokens. Complications occur when a token’s features evolve over time or straddle categories (utility vs. security), thereby requiring ongoing legal review to avoid regulatory enforcement of a misclassification. Thus, getting expert legal assessment upfront is crucial.

• Jurisdictional Conflicts: Tokenized assets often operate on global networks but laws are mostly local. Regulations tend to vary widely across jurisdictions. One country may treat a token as a security, while another may treat it as a commodity or provide no clear guideline at all. Consequently there is uncertainty in cross-border token offerings and trades. Fragmentation on the legal front pressurizes issuers into avoiding certain geographies altogether (geofencing users) or undertaking compliance across multiple jurisdictions which is not necessarily cost effective. Until international standards or mutual recognition frameworks develop, this will remain a significant compliance hurdle.

• KYC/AML Requirements: Regulations globally require Know Your Customer (KYC) and Anti-Money Laundering (AML) checks as part of compliance. A challenge here is that different jurisdictions have different AML standards and data privacy laws, a sound KYC program must navigate varying ID requirements and privacy rules. Ensuring that token issuers and exchanges verify user identities and monitor transactions helps mitigate risks of money laundering, terrorist financing, or sanctions evasion. Solutions like on-chain analytics and digital identity frameworks help automate compliance.

Subscribe now

Notable Regulatory Developments

Switzerland

The Swiss government implemented a new DLT (Distributed Ledger Technology) framework in 2021 that amended various laws to recognize ledger-based securities. It explicitly allows the tokenization of rights, claims, and financial instruments by entry on a blockchain (a securities ledger) with the same legal standing as traditional certificated securities. By updating civil and financial market laws, Switzerland has embraced tokenization within its legal system, attracting many fintech and crypto companies to build tokenized products under clear rules.

Germany

In Germany, the Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG), implemented in 2021, recognized purely digital securities in German law. Blockchain (DLT) is explicitly recognized as a form of electronic securities register under this law, enabling the issuance of crypto-securities that are represented by tokens on a blockchain rather than physical certificates. It also created a regulated role for blockchain custodians/registrars: maintaining a crypto-securities registry became a licensed financial service under BaFin’s supervision.

European Union

In addition to MiCA as discussed in my previous article, the EU’s pilot regime for DLT-based market infrastructures implemented in 2023 is a significant development. It acts as a sandbox allowing stock exchanges, trading venues, and central securities depositories to handle tokenized financial instruments with certain regulatory exemptions.

United Kingdom

The UK, after leaving the EU, is charting its own path and has recently pivoted to a more crypto-friendly yet controlled approach. In 2023, the UK announced the Financial Market Infrastructure Sandbox for Digital Securities, run by the FCA and Bank of England. It invites firms to experiment with tokenized securities and infrastructures under close regulatory supervision - aim is to allow innovations to be tested in a safe environment and inform future UK policy. The UK is embracing the potential of tokenization but is keen to bring it within the remit of financial regulation to manage risks.

United States

SEC Crypto Task Force Roundtable brought clarity to tokenization use cases in May 2025. The SEC has urged participants to meet up with its staff at the time of structuring tokenized products or offerings. It has clarified that when unique aspects of a technology warrant changes to existing rules or where regulatory requirements are outdated or unnecessary, SEC is willing and ready to work with market participants to craft appropriate exemptions and modernize rules.

Other Jurisdictions

• Singapore and Hong Kong have been refining regulations (and launching sandboxes) to attract digital asset businesses while enforcing safeguards.

• India is launching sandboxes, consultation papers, and technical guidelines rather than imposing outright bans. Tokenization is being introduced alongside traditional financial laws (via market regulators), often through targeted regulatory amendments and DLT mandates. Use cases are focussed around real estate, MSME finance, commodities, and sustainable assets aligned with India’s market priorities.

• The UAE, particularly Abu Dhabi and Dubai, have introduced bespoke regulatory frameworks allowing tokenized securities and other crypto assets to be offered under licensing regimes, signaling an effort to become hubs for tokenization activity.

• Australia and Canada are also exploring updates to securities laws to clarify the status of security tokens.

Meanwhile, international standard-setters are weighing in. IOSCO (the International Organization of Securities Commissions) in 2023 proposed global standards for crypto and digital markets, which will likely influence national regulations.

Subscribe now

Future of Regulation in Asset Tokenization

The future of asset tokenization regulation is one of increasing clarity and convergence. We can expect more laws that explicitly include tokenized assets, more regulatory guidance that narrows grey areas, and greater enforcement against non-compliance to level the playing field.

At the same time, regulators are keen not to stifle innovation, many have stated their goal is to harness the efficiency benefits of tokenization for the economy while mitigating the risks. The trajectory is toward frameworks that allow tokenization to flourish under appropriate oversight. Active participation in dialogues with regulators will help shape standards (for example, contributing to consultations or industry self-regulatory efforts) and facilitate adaptability. Ultimately, the jurisdictions that strike the right balance between promoting tokenization and protecting investors are likely to become leaders in the next generation of finance.

References

• https://www.rwa.io/post/regulatory-challenges-of-tokenizing-real-world-assets

• https://kennedyslaw.com/en/thought-leadership/article/cryptoassets-fca-publishes-guidance-on-regulation-of-cryptoassets/

• https://www.zoniqx.com/resources/ensuring-global-compliance-in-asset-tokenization-a-comprehensive-guide-to-dycists-multi-jurisdictional-features

• https://www.globallegalinsights.com/practice-areas/blockchain-cryptocurrency-laws-and-regulations/switzerland/

• https://www.bitbond.com/resources/german-electronic-securities-act-ewpg/

• https://www.nortonrosefulbright.com/en/knowledge/publications/60edb8c8/understanding-tokenization

• https://www.sec.gov/newsroom/speeches-statements/peirce-statement-tokenized-securities-070925

• https://www.morganlewis.com/pubs/2025/05/sec-roundtable-on-tokenization-technology-meets-regulation-in-the-evolution-of-capital-markets

P.S.

In case the cover image caught your attention, then you should definitely check out my website and my IG account for similar artworks. I’m an abstract textured artist known for my unique palette knife technique, my signature style.

https://www.cgayas.com/

https://www.instagram.com/cgayasart/

Artist Bio

Gaya Chandrasekaran is a London-based contemporary artist. She was born in the southern Indian city of Chennai on the shores of the Bay of Bengal, a vibrant city where centuries-old traditions live in delightful harmony with rapid modernization. She grew up surrounded by bright and jubilant sounds and colors that have consistently inspired her creative pursuits. She loves learning new techniques and trained in India as well as in the UK at Slade School of Art.

She spent the past decade in corporate and investment banking in London. The meticulous approach from her banking career carries over into her art practice, where she employs deep precision in her textured artworks. Gaya has exhibited widely in London including at the London Business School and Santander Corporate & Investment Banking, with publication in the Artist Talk Magazine, UK. She held her first solo exhibition in London in 2018 and has since exhibited across the USA, Europe, and Asia in both physical and digital formats.