Asset Tokenization in Financial Markets 2025

Contents48 6.1 Infrastructure When different financial institutions adopt tokenization, they need to decide upon the underlying infrastructure. Three models of programmable ledgers are presented, two permissioned and one permissionless, with varying benefits. Permissioned ledgers Financial markets have historically used private- and public-permissioned programmable ledgers because of the native functions of control and oversight, which can mitigate AML, KYC, legal and fraud risks and enable dispute resolution. This environment allows for efficient data sharing and secure record-keeping, bolstering trust, as only approved entities can read or write transactions. At the same time, in a permissioned setup, broader participation is possible but still governed by strict rules of entry. For example, JP Morgan’s Kinexys platform has processed more than $1.5 trillion in notional value since its inception in 2021 by offering DLT-based payments, intraday repo and collateral services.133 Another example is Citi’s Integrated Digital Assets Platform (CIDAP), which offers an array of use cases across tokenized deposits, trade processing, bond exchange and private fund tokenization.134Design choices TABLE 6 Key programmable ledger models CATEGORY Description Transaction permissions Data viewability Governance modelOpen access: No entry barriers and any user with internet access can submit transactionsRestricted access: Participants vetted and approved by trusted authorities can submit transactions Controlled transparency: Targeted privacy measures feasible (e.g. selective disclosure) Moderately centralized: Governance through permissioned entities who validate the networkClosed and selective entry: Typically, enterprises and known counterparties can submit transactions Strict confidentiality: Default confidentiality with complete control over data exposure Highly centralized: Even narrower onboarding of permissioned entities to validate the networkFully transparent by default: Privacy achievable through additional tools (e.g. ZK proofs) Highly decentralized: Consensus among independent nodes (e.g. proof-of-stake) Scalability and performanceHigh throughput: Optimized for regulatory compliance and institutional transactionsHigh throughput: Purpose-built for enterprise- level volume and with predictable performanceVaries significantly: Dependent on consensus algorithms (e.g. proof-of-work is not natively scalable, while proof-of-stake is scalable) Compliance and regulatory alignmentStrong compliance: Designed for regulated activities and integration with legacy infrastructureHighest compliance: Explicitly designed for internal regulatory adherence, auditability and granular controlMinimal by default: Compliance possible but requires additional processes or layers Liquidity and market accessModerate liquidity: Dependent on size and influence of the managing consortium, targeted towards institutional-grade asset poolsVariable liquidity: Access tightly controlled but can be engineered for high internal liquidity within members, suitable for discrete tradingHigh liquidity: Driven by network effects, global participation and interoperability; suitable for broadly traded assets and digital currencies Infrastructure requirementsModerate barrier to entry: Stable, predictable operational costs aligned with enterprise standardsHigh barrier to entry: Lowest marginal transaction costs; ideal for large, structured transactionsLow barrier to entry: Moderate–high operational and transaction costs based on network feesPUBLIC-PERMISSIONLESS PUBLIC-PERMISSIONED PRIVATE-PERMISSIONED — Open, decentralized networks where anyone can join, transact and validate transactions without prior approval — Ideal for broad participation and innovation but with variable performance and limited default privacy— Networks open to selected, vetted participants, typically regulated entities — Blend decentralization with controlled governance, providing viewability, high performance and regulatory alignment— Fully controlled and centralized networks with restricted access to pre-approved participants — Optimized for high performance, confidentiality, regulatory compliance and internal institutional use cases