Asset Tokenization in Financial Markets 2025

Contents24 Tokenized assets Source: Aldasoro, I., Cornelli, G. Frost, J., Koo Wilkens, P., & Shreeti, V. (2025). Tokenisation of government bonds, mimeoBased on the subset of tokenized bonds with an available International Securities Identification Number (ISIN).Sovereign bonds Government or sovereign bonds are debt securities issued by national governments, often considered low-risk investments and used as benchmarks for interest rates. They are critical for funding government operations and old debt or interest. They also play an integral role in institutional portfolios, providing predictable returns and aiding in retirement planning.24 Government authorities are gradually endorsing tokenized public debt, evidenced by His Majesty’s Treasury’s plans for a digital gilts pilot in the UK Finance’s comprehensive roadmap,25 the US Commodity Futures Trading Commission acceptance of tokenized treasuries as non-cash collateral26 and the US Treasury’s acknowledgment of potential operational benefits.27 In Hong Kong, the government has committed to the issuance of tokenized bonds as standard practice. The Hong Kong Monetary Authority (HKMA) is preparing to issue the third tranche of tokenized bonds, while actively exploring tokenizing existing bonds.28 Collectively, there is a progressive shift towards adopting tokenization for sovereign securities. Cumulative amount issued (left-hand side): Commercial Sovereign, supranational and agencyCumulative issuances (right-hand side):$ billion No of bonds 201901234 05101520 2020 2021 2022 2023 2024FIGURE 8 A growing number of issuers are experimenting with tokenized bonds Commercial vs. sovereign, supranational and agency tokenized bondsFixed income Fixed-income securities are debt instruments issued by a government, corporation or other entity to finance their operations. They provide investors with a return in the form of fixed periodic payments and the eventual return of the principal at maturity.20 The global fixed- income, or bond, market was valued at approximately $140.7 trillion in 2023.21 Fixed- income tokenization has seen notable advances in sovereign, corporate and municipal bonds. According to an Official Monetary and Financial Institutions Forum (OMFIF) survey of 26 financial institutions, 65% believed that bonds were the most likely to be tokenized.22 For example, the European Investment Bank (EIB) has issued several bonds on-chain, proving the feasibility of tokenization. Since 2021, with its inaugural digital bond issued on Ethereum, the EIB has issued five bonds, most recently using HSBC’s Orion platform for issuance and the Banque de France’s DL3S platform for settlement.23