Asset Tokenization in Financial Markets 2025

Contents7 Pre-1980s 1980s–2010s Post-2010s FRAGMENTED AND MANUAL-INTENSIVECENTRALIZED AND INTERMEDIARY-INTENSIVEDISTRIBUTED AND USER-CENTRICPAPER CERTIFICATES — Securities were manually issued, transferred and settled through physical paper certificates, creating significant operational bottlenecks, slow T+5+ settlements and fragmented record-keeping across registrars and custodians. — The lack of effective, centralized coordination made reconciliation error- prone and delayed capital movement.DEMATERIALIZATION — Electronic book-entry systems digitized securities and centralized them within clearing houses and custodians, solving many operational inefficiencies from the paper era. — However, they introduced new dependencies on intermediaries, and settlement cycles – although faster – still hovered at T+2. — Geographic barriers and limited interoperability constrained inclusivity, and real-time transparency was available only to selected institutions.— Tokenization introduces a shared system of record and programmable, real-time asset transfer, reducing settlement risk and optimizing intermediary chains. — With on-chain auditability and greater ownership control, tokenized assets address the coordination inefficiencies and the latency and exclusivity of prior iterations of financial systems. — This shift enables multi-asset operations underpinned by financial infrastructure that is more composable and accessible.TOKENIZATIONFoundational key concepts FIGURE 1 The evolution of financial assets1.1 Tokenization Tokenization is the process of using a programmable ledger to digitally represent the ownership of an asset – financial or otherwise – in a transferable format. By creating provably unique digital tokens that can be issued, stored and traded on these ledgers, tokenization enables the exchange of information and value. A “token”, in this context, represents something of value (e.g. a claim on or digitized version of a real or financial asset) that can be legally and operationally exchanged on a programmable ledger.1