Asset Tokenization in Financial Markets 2025

Contents42 5.1 Evolving market structures Tokenization will change intermediary roles, not eliminate or displace them.111 Reducing intermediaries is often hailed as a value driver for tokenization; however, reducing or eliminating intermediaries is not always beneficial, as incumbents provide valuable services to maintain safety and soundness. For example, Phase 2 of the e-HKD pilot demonstrated that intermediaries could act as dynamic facilitators of liquidity and trust by managing separate liquidity pools for instant retail CBDC-to-fiat conversion to bridge tokenized and traditional systems and ensure adoption where tokenized assets are not yet widely accepted.112 Market structures – including the buy/sell side (e.g. wealth managers, asset managers), issuers (e.g. a public government issuing securities or a corporation issuing bonds), exchanges, CCPs, CSDs, custodians and transfer agencies (TAs) – are evolving to adapt to tokenization. Full disintermediation in regulated financial markets has been demonstrated experimentally. For example, DekaBank issued and sold a digital bearer bond without intermediaries.113 This should be viewed cautiously as intermediaries thwart harmful market practices and, instead, markets should evaluate the roles of incumbents alongside new entrants. Regulators are advancing the collective understanding of enhanced market structures through industry initiatives, including the United Kingdom’s Digital Securities Sandbox and the European Union (EU) Pilot Regime. Project Guardian led by the Monetary Authority of Singapore also serves as another platform for the collaborative design of a tokenized value chain. While the asset life cycle will remain unchanged, tokenization reshapes interactions among incumbents and digital-native service providers to meet new demands for speed, efficiency and compliance. Incumbent responsibilities will likely evolve in parallel with the introduction of digital-native market structures and service providers, creating a platform for product innovation.5.2 Changes to incumbents Incumbent responsibilities will expand to offer new value propositions.114 For example, 21X launched a regulated exchange and settlement system on Polygon after being licensed under the EU Pilot Regime’s exemptions from CSD Regulations and Markets in Financial Instruments Directive requirements, allowing the integration of a conventional exchange and CSD into one smart contract for trading.115 What will remain a constant is the preference for trusted intermediaries, particularly where centralized services, such as custody and regulatory compliance, are critical. Buy/sell-side (asset managers, wealth managers, brokers/dealers) The sell-side traditionally handles trade execution and client relationships with the buy- side, while the buy-side manages portfolio strategies and client relationships with end investors. Tokenization expands their role to include reusable digital identity verification, advising on token portfolios, underwriting assistance, automated ordering on digital exchanges, on-chain settlements with on- chain cash, self-custody wallets (e.g. Robinhood’s Non-Custodial Wallet) and automated rebalancing/yield strategies using tokenized platforms. Issuers Issuers are traditionally tasked with capital raising and corporate actions, issuers are now making use of tokenization for on-chain capital formation, automated corporate actions (e.g. voting) and programmable asset terms, thus enhancing efficiency and transparency. Issuers often incur underwriting, legal, exchange listing and registration fees – all aimed to be reduced by tokenization. Exchanges Tokenization modernizes exchanges by enabling programmable trading restrictions via digital identities (e.g. insider trading controls), supporting tokenized listings (e.g. Deutsche Börse’s digital exchange) and merging traditional and decentralized models (e.g. AMMs), thereby enhancing compliance and market accessibility. Central counterparties CCPs mitigate counterparty risk through collateral management and trade intermediation. In tokenized markets, they may evolve into governance-focused entities, managing tokenized collateral and cross-chain risk via smart contracts.116Impacts of tokenization