Benefits of Asset Tokenization

This is big news. Tokenization is fast becoming the next battleground for financial infrastructure. Goldman Sachs and BNY Mellon just made one of the boldest moves yet. Tokenization transforms real-world assets into digital tokens - unique, programmable representations of value that can be transferred, tracked, and embedded into automated financial workflows. Goldman Sachs and BNY Mellon are turning traditional money-market funds (MMF) into digital tokens. These funds - a $7.1 trillion global market managed by firms like BlackRock, Fidelity, and Federated Hermes - are commonly used by companies and asset managers to hold short-term cash in safe, interest-earning instruments like Treasury bills and commercial paper. But behind the scenes, they still run on decades-old infrastructure, full of manual steps, cut-off times, and delayed settlements. Tokenization changes that. 𝗛𝗼𝘄? By bringing the same speed, transparency, and automation we expect from modern payments and applying it to financial instruments that haven’t evolved in decades. ·      Instant settlement: Instead of waiting hours (or days) for trades to clear, tokenized assets can settle almost instantly - 24/7, without cut-off times. ·      Programmability: Rules and logic (e.g., eligibility checks, compliance constraints) can be embedded directly into the token - reducing manual oversight. ·      Fractional ownership: Investors can hold smaller, more flexible portions of a fund, which is hard to do in traditional structures. ·      Real-time tracking: Every transfer or ownership change is recorded transparently on a blockchain, improving auditability and risk management. ·      Easier collateralization: Tokenized fund shares can be pledged as collateral or moved between counterparties far more efficiently - a big advantage in treasury and liquidity management. 𝗛𝗼𝘄 𝘁𝗵𝗲 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝘄𝗶𝗹𝗹 𝘄𝗼𝗿𝗸: ·      BNY Mellon will distribute tokenized money-market funds to institutional clients via LiquidityDirect - its cash management platform that helps treasurers and asset managers invest short-term liquidity. ·      Goldman Sachs will record and track ownership of the fund tokens on its private blockchain, providing speed, traceability, and operational efficiency. ·      The offering will support tokenized versions of funds managed by major players like BlackRock, Fidelity, and Federated Hermes. 𝗪𝗵𝘆 𝗻𝗼𝘄? The new U.S. Genius Act gives legal clarity for stablecoins and tokenized assets -removing regulatory uncertainty and unlocking tokenization across mainstream finance. 𝗪𝗵𝗮𝘁’𝘀 𝗻𝗲𝘅𝘁? This could reshape expectations around liquidity, treasury operations, and how financial assets are managed and settled. Custodians and asset managers will need to adapt. Tokenized Treasuries, equities, and real estate are already being tested. Opinions: my own, Graphic source: CNBC 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

UPI proved something powerful. When you make a system simple, trusted, and low friction, adoption follows and inclusion becomes real. India should now bring that same thinking to investing and asset ownership. That is why I raised the need for an Asset Tokenization Bill in Parliament. Asset tokenization is one of the most significant technological financial innovations of this century. It can convert large real world assets into smaller digital units, making ownership and investing more inclusive. For a middle-class household, the realistic investment avenues are still limited. Beyond a savings account, mutual funds, or fixed deposits, many quality assets remain out of reach because the ticket size is too high and the exit is too difficult. Tokenization can change that by enabling fractional ownership in assets that were previously accessible only to large investors. Real world assets such as real estate projects, infrastructure projects, commodities, and intellectual property can be converted into tradeable digital tokens, allowing ordinary investors to participate in value creation with simpler entry and exit. This is especially relevant in India because households have a strong cultural affinity to real estate and precious metals like gold and silver, and a large share of household wealth sits in these asset classes. Tokenization directly matches that preference by using blockchain technology to make these investments more accessible, tradeable, and transparent. The biggest game changer is instant liquidity in assets that have traditionally been illiquid. A common investor should be able to buy and sell without excessive broker fees or the usual registry and property dealer hassles. When transactions become transparent and simpler, intermediaries reduce, transaction costs reduce, and a middle-class investor is not forced to keep capital locked up simply because the asset is hard to exit. Of course, this must be done responsibly. India needs clear legislation, strong investor protection, a robust regulatory sandbox, and regulatory clarity so innovation grows within a safe framework. If we get the framework right, we expand participation, deepen markets, and keep more capital and innovation building in India. What should be non-negotiable in an Indian asset tokenization framework from day one? #Innovation #FinTech #Tokenization #Investing #DigitalTransformation #CapitalMarkets #Parliament  #Blockchain      

🤓FINALLY it is published 📖(11 Nov) Tokenization of Financial Assets International Organization of Securities Commissions - IOSCO ⏳ In recent years, the financial sector has been experimenting with #DLT to deliver financial services. Proponents argue that features such as fractionalization, programmability, composability, and atomicity may create efficiencies, expand access to products, and reduce frictions. However, the adoption of new technologies can also introduce or amplify risks that regulators must understand and address to safeguard investors’ interests. 📑The Report notes that #IOSCO’s existing principles—being technology-neutral—remain applicable to tokenization. 🕵️♀️The Fintech Task Force #FTF gathered evidence through literature review, regulatory surveys, and stakeholder outreach. 📊 It found varying levels of commercial adoption, depending on use-case objectives and challenges. 👶Overall, tokenization remains nascent: 📈Growth is uneven and uncertain across asset classes, with fixed-income products and money-market funds #MMFs leading adoption. ⛓️💥Lack of cross-blockchain interoperability and credible settlement assets limits scalability. 🔄Lifecycle impact findings: 🖨️ Issuance and distribution: Tokenization has evolved, but distribution and secondary trading still rely on traditional infrastructure due to liquidity and accessibility concerns. 📩Clearing and settlement: DLT-based systems can offer faster settlement, but participants often prefer traditional infrastructure due to familiarity, operational resilience, and network effects. 🗃️Asset servicing: Some digital custody and collateral mobility improvements have been observed (e.g., intraday repo). ⚠️Risk observations: ‼️Risks vary by use case, technology, and architecture. Most risks map to existing taxonomies, but some vulnerabilities are unique to DLT—for instance, cyber-attacks, data leakage, network congestion, smart contract bugs, or private-key loss. 📝Legal uncertainty remains significant—especially regarding ownership and transfer rights of tokenized financial assets, particularly for non-native tokens. ⚖️As tokenization scales, regulators should anticipate potential market structure changes, increased dependencies, and interconnectedness that could amplify systemic risks and link tokenized finance with crypto-asset markets (e.g., tokenized MMFs used as “stablecoin” reserve assets or crypto collateral) 📚Regulatory responses by IOSCO members include: 📄 Applying existing frameworks 📄 Issuing guidance clarifying regulatory applicability 📄 Establishing sandbox regimes 📄 Enacting amended laws and regulations 📘 The Report concludes that members should consider applying IOSCO’s technology-neutral, principles-based, and outcomes-focused standards, including: 1️⃣ Objectives and Principles of Securities Regulation (IOSCO 2017) 2️⃣ Recommendations for Crypto and Digital Asset Markets (IOSCO 2023) 3️⃣ Recommendations for Decentralized Finance (IOSCO 2024)

Visa and Mastercard are giving away free money, and 99% of merchants are ignoring it. I have talked about it several times...but it is still the number one question I get from merchants. Should they use Network Tokens, or is it just another way to charge them extra for the same transaction. This is what I tell them... Network tokenization isn't just a security upgrade. It's a revenue opportunity hiding in plain sight. Visa's data shows that token transactions deliver a 4.6% rise in authorization rates globally compared to PAN transactions. Even Fiserv reports that merchants see an average 2.1% authorization uptick when using network tokens instead of primary account numbers. The fraud reduction numbers are even more striking. According to Visa's data token-based transactions drive a 30% reduction in fraud online versus PAN. When merchants use Visa-issued network tokens, fraud rates decline by an average of 26%. That's not just cost savings. It's customer trust protection. The automatic update feature solves a $20 billion problem most merchants don't realize they have. When cards expire or get reissued, traditional stored credentials fail. Network tokens get dynamically updated in real time to ensure credentials are always current. No more subscription churn from expired cards. No more failed recurring payments. Another benefit of using Visa's network tokens, is that interchange rate is up to 10 basis points lower than non-tokenized rates on qualifying transactions. For a merchant processing $100M annually, that's $100,000 in direct savings. Before counting the revenue from fewer declines. Yet most merchants still send raw PANs through their payment stack. They're paying higher interchange, accepting lower authorization rates, and losing customers to preventable payment failures. All while the networks are literally incentivizing them to switch. Microsoft's Director of Global Payments puts it perfectly: tokens provide "less opportunity for transactions to be declined because of stale credentials." Better churn stats. Inherently safer transactions. The infrastructure exists today. Most PSPs support network tokenization, and orchestrators such as IXOPAY have it build into their platform. The question isn't technical capability. It's whether you're leaving money on the table while competitors optimize their payment stack. What's your current network token adoption rate? P.S. Check out my newsletter for more Payments Strategy https://lnkd.in/e6eXZrF9

Real-World Asset Tokenization: The Game Changer That’s Bridging the $2.5 Trillion Trade Finance Gap Real-world asset #tokenization (RWAT) has the potential to revolutionize trade finance by making it more accessible, efficient, and inclusive. By tokenizing #tradefinance assets, new #investment opportunities can be unlocked, contributing to narrowing of the $2.5 trillion global trade finance gap. Project Guardian demonstrated the viability of asset-backed tokenization, showcasing its potential to enhance liquidity and investor access. Tokenizing trade #assets converts them into transferable instruments, offering unparalleled #liquidity and accessibility to investors. This #innovation enables a broader investor base to participate in #financing global trade. Middle market enterprises (MMEs), often underserved in traditional finance, represent a significant opportunity for investors. Tokenization offers a pathway to provide #capital to this segment, especially in fast-developing regions like the Middle East, Asia, and Africa. Trade finance assets, though underinvested, offer strong risk-adjusted returns. They exhibit low #default rates and high #recovery rates, making them attractive yet #underutilized by #institutional investors. The upcoming Basel IV #regulations incentivize banks to adopt #blockchain-based originate-to-distribute models. Tokenization helps banks derecognize assets from their balance sheets, reducing regulatory capital requirements and enhancing operational efficiency. Demand for tokenized assets is expected to soar, with 69% of buy-side firms planning to invest in tokenized assets by 2024. The market for tokenized trade finance assets could grow to represent 16% of the total tokenized asset market by 2034, highlighting its vast potential. The successful scaling of tokenization in trade finance requires collaboration between banks, investors, #technology providers, and regulators. Public-private partnerships will be crucial in establishing a stable and #interoperable #digitalasset ecosystem. Investors are encouraged to participate in pilot programs, while banks should collaborate to develop industry-wide tokenization utilities. Finally, Project Dynamo exemplifies how tokenization can address trade complexity. By using digital trade tokens (DTTs), Project Dynamo streamlines financing for SMEs across supply chains, demonstrating the transformative power of tokenization. These above underscore the #transformative potential of #RWAT in reshaping global trade finance and the broader financial landscape. Now is the time for stakeholders across the financial ecosystem to act and capitalize on this unprecedented opportunity.

Payment Tokenization Explained If you’re handling payments in 2026, understanding tokenization is a must. Here's what caught my attention: 62% of merchants and 92% of financial institutions already use tokenization. But many teams still aren't clear on how it works or why it matters for their business. ____ What is Payment Tokenization? Think of it as a security swap. Instead of storing actual credit card numbers (like 4532-1234-5678-3511), you store a random token (like 4532-8716-5413-2416). That token links to the real payment details stored in a secure, PCI-compliant vault. When you process a transaction, you send the token. Your payment provider swaps it for the real card details behind the scenes. Simple concept, massive implications. ____ Why It Matters -> Security: If you're breached, hackers get worthless tokens, not card numbers. The token can't be reverse-engineered. -> PCI Scope Reduction: Tokens can reduce your PCI compliance scope by up to 90%. Less data = less liability. -> Faster Checkouts: Returning customers do not need to re-enter their payment details. The friction disappears. -> Multi-Processor Freedom: With the right tokenization strategy, you're not locked into a single payment provider. ____ The Three Types of Tokens This is where it gets interesting: 1. PSP Tokens: Issued by your payment service provider. Great for getting started, but they lock you to that provider. 2. Network Tokens: Created by card networks (Visa, Mastercard, Amex). They boost authorization rates and reduce interchange fees, but require network-specific integrations. 3. Merchant Owned or Universal Tokens: Provider-agnostic tokens that work across all your processors and channels. Maximum flexibility, zero vendor lock-in. Most sophisticated merchants combine universal and network tokens strategically based on their infrastructure and goals. ____ Whether you're scaling globally, managing subscriptions, or trying to reduce fraud, tokenization is foundational infrastructure. The question isn't whether to implement it, but how to do it right for your specific use case. The payments landscape has shifted from single-processor setups to multi-processor strategies. Independent tokenization is what makes that transition possible without creating a data management nightmare. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU #paymenttechnology #fintech #tokenization

"At the heart of this vision [of the next-generation #monetary_and_financial_system] is the concept of #tokenisation, the process of recording claims on real or financial assets that exist on a traditional ledger onto a #programmable_platform.   #Tokenisation represents the next logical progression in the evolution of the monetary and financial system, as it enables the integration of #messaging, #reconciliation and #asset_transfer into a single, seamless operation.   Its potential lies in its ability to knit together operations encompassing money and other assets that would reside on the same programmable platform.   This could be made possible by a new type of financial market infrastructure – a "#unified_ledger" – which may or may not use #distributed_ledger_technology (DLT). By bringing together tokenised #central_bank_reserves, #commercial_bank_money and financial assets into the same venue, a unified ledger can harness tokenisation's full benefits.   Tokenisation is poised to both improve the old, by overcoming the frictions and inefficiencies of the current architecture, and enable the new, by opening up new #contracting possibilities. In #cross_border_payments, tokenisation could replace the #complex_chain_of_intermediaries and the sequential updating of accounts in today's correspondent banking transactions with a #single_integrated_process.   Together with state-of-the-art #compliance_tools made available on the platform, tokenisation would thereby reduce #operational_risks, delays and costs. Similarly, it would enhance capital markets by enabling the contingent execution of actions in terms of #collateral_management, margining adjustments and delivery-versus-payment arrangements."   — From: #BIS (Bank for International Settlements), The Next-Generation Monetary and Financial System (Chapter III), Annual Economic Report 2025, June 24, 2025   The full document is here: https://lnkd.in/eJZXBY9R

In their The Economist article, BlackRock CEO Larry Fink and COO Rob Goldstein herald #tokenization as #finance’s most exciting #innovation since double-entry bookkeeping, likening it to the #internet’s nascent 1996 phase or to SWIFT’s 1977 arrival that slashed settlement times from days to minutes. Tokenization, powered by #blockchain, promises the next leap: instantaneous, secure #asset transfers on digital ledgers. Once overshadowed by #cryptocurrency speculation, tokenization now surges, with tokenized financial assets growing 300% in 20 months. It enables atomic settlement—simultaneous asset and payment exchanges—reducing risks, costs, and errors. Benefits include broader access to illiquid assets like real estate or art via fractional ownership, 24/7 #trading, and programmable smart contracts for automated compliance. Collaboration between incumbents (e.g., banks) and #digital innovators will drive adoption, but success hinges on regulation, interoperability, and safeguards against hacks. Fink and Goldstein envision a hybrid system blending traditional and blockchain infrastructure, democratizing markets and unlocking trillions in value. However, challenges persist: scaling beyond pilots, ensuring cross-chain compatibility, and building investor #trust. As adoption accelerates, tokenization could redefine global finance by 2030, fostering efficiency and #inclusion. My View: We are in the midst of this revolution. Tokenization isn’t a #future promise—it has already profoundly reshaped finance today, with trillions in monthly transactions proving its viability. BlackRock’s BUIDL fund, a tokenized money market yielding USD returns on-chain, $2.3 billion in assets under management since March 2024, dominating U.S. tokenized products. Franklin Templeton’s on-chain fund manages over $400 million, offering 24/7 liquidity. Stablecoins like Tether (USDT) and Circle’s USDC exceed $200 billion combined market cap, enabling instant cross-border payments. Goldman Sachs, J.P. Morgan , and Broadridge process trillions monthly via tokenized collateral, slashing settlement times. TradeFlow ’s $100 million tokenized commodity fund boosts accessibility for insured trades. The International Monetary Fund (IMF) recognizes tokenization’s potential to address financial market inefficiencies across asset lifecycles, enhancing transparency and cutting frictions through programmable ledgers, though it cautions on amplified volatility, fragmentation risks, and the need for robust oversight to prevent flash crashes. The European Central Bank (ECB) is advancing tokenization via initiatives like Pontes and Appia, aiming to create a unified European ledger for settling tokenized assets in central bank money, fostering a digital capital markets union with 24/7 interoperability. #fintech #investing #strategy

Asset tokenization is transforming global financial markets by converting real-world assets—such as real estate, bonds, equities, and intellectual property—into digital tokens using blockchain or distributed ledger technology (DLT). This enables fractional ownership, improved liquidity, automated compliance, and cost-efficient settlement through smart contracts. By 2030, tokenized assets could represent USD 16 trillion, about 10% of global GDP, with the fastest growth expected in real estate, art, and financial instruments. Projects like MAS-led Project Guardian and Global Layer One (GL1) are pioneering tokenization of bonds, FX, and funds with major banks such as DBS, Citi, and HSBC. Key benefits include: Programmability and composability for customized financial products Real-time transparency and improved user experience Lower transaction costs and reduced intermediation However, challenges persist: Regulatory ambiguity and fragmentation Lack of interoperability across blockchains Inconsistent classification and legal recognition of tokenized assets Investor protection and education gaps International regulators (IOSCO, BIS, IMF) are working to address these through global standards and sandbox frameworks. With growing institutional adoption and technological maturity, tokenization is moving from pilot to scale, heralding a more inclusive, efficient, and transparent financial future. - Source Global Finance & Technology Network

Corporate treasuries are going on-chain. Are you ready for programmable finance?” The digital treasury transformation is underway. And it's not just about holding crypto anymore. By 2025, sizeable portions of corporate treasuries will shift on-chain. This will unlock liquidity, reduce costs, and enable 24/7 programmable finance. The foundation is already laid: --> Stablecoins processed $27.6T — more than Visa or Mastercard. --> Over $5B in U.S. treasuries are tokenized and on-chain. --> Tokenized real-world assets (RWAs) surpassed $20B, led by institutional demand. --> Even luxury assets — like $3B in tokenized diamonds — are finding liquidity via Vaultik. Why this matters: 1) Liquidity will no longer be locked 2) Fractional ownership will be real 3) Finance will operate 24/7 — not just 9 to 5 This will ensure: - No more waiting days for the capital to move. - Yield, compliance, and treasury functions — become automated and global. The road ahead: - Tokenized bonds could reach $1T by 2028 - Citi forecasts $4–5T in tokenized securities by 2030 What this means for your business? 1) Faster capital cycles 2) Broader investor access 3) Automated compliance and reporting If you're exploring tokenized treasury strategies or evaluating blockchain-powered finance infrastructure: Let’s talk. I’m happy to share insights and proven architecture. Follow Anurag Yadav for practical takes on tokenization, digital assets, and future finance.