Asset Tokenization in Financial Markets 2025

Contents10 Foundational key concepts Legal, operational and market dynamics These two tokenization models provide the foundation for issuance and settlement driven by programmable ledgers, yet these models are influenced by legal and operational dynamics. From a legal perspective, the proof of ownership, or a claim, over an asset may technically be evidenced by the programmable ledger. However, two challenges persist: Operationally, proof of value and redemption, if applicable, carry some ambiguity. Reliance on a reference asset necessitates off-chain third-party audits and coordination of dual- or tri-liquidity pool management to ensure sufficient backing and proof of value to cover the outstanding tokens and other buffers, such as liquidity coverage ratios. Redemption depends on issuer and custodian operations. Another operational aspect is bankruptcy- remoteness, which aims to protect customer assets if the issuer or custodian becomes insolvent. Proper segregation of accounts and legal structures ensures underlying reference assets are separated from the issuer’s balance sheet, safeguarding investors and reducing counterparty risks. The state of ownership must be legally enforceable, such as through a rulebook. Currently, property and ownership rights assigned to assets outside programmable ledgers remain legally uncertain.Clear rules must be established regarding the reconciliation and synchronization of counterparties’ books and records against the programmable ledger to mitigate discrepancies. 1 2