Tokenisation & Market Infrastructure

Tokenisation: from crypto product to financial infrastructure

The digital asset conversation is moving beyond exposure to cryptocurrencies. Banks, asset managers and market infrastructures are increasingly using blockchain rails to issue, transfer and settle ordinary financial assets — money market funds, deposits, bonds and private-market securities. This note sets out what tokenisation genuinely solves, where expectations still run ahead of reality, and the questions worth asking before allocating to a tokenised vehicle.

Manuel E. De Luque MuntanerCEO & Founder

7 August 202610 min read

Key takeaways

Tokenisation is shifting from crypto product to financial plumbing. What is being issued on blockchain rails is increasingly ordinary: money market fund share classes, bank deposits, bonds and private-market interests — not new asset classes.
The clearest benefits are operational rather than speculative: faster and more certain settlement, programmable transfers, continuous availability and, most underrated of all, the ability to move collateral intraday.
Issuing a token does not create a market. A digital representation of an asset and a liquid secondary market for that asset are different things, and product marketing routinely conflates them.
What you settle in matters as much as what you trade. Tokenised deposits, regulated e-money tokens and other stablecoins carry materially different credit, legal and operational profiles.
For allocators the decisive questions are legal and operational rather than technological: what right does the token represent, who maintains the definitive record of ownership, where does real liquidity exist, and what happens in a technology failure or an insolvency.

From experimentation to implementation

For most of the last decade, tokenisation in financial services meant a proof of concept. An institution would issue a small bond on a private ledger, publish a case study, and the exercise would end there. The technology worked. The business case rarely survived contact with the infrastructure it was meant to replace.

That has begun to change, in a specific and limited way. The activity moving into production is concentrated where blockchain rails address a genuine operational friction, rather than where they make an interesting demonstration.

The first week of August 2026 offers a compact illustration. Schroders received approval from the Central Bank of Ireland for a tokenised share class of a US dollar money market fund, issued as a digital twin of an existing share class on J.P. Morgan's Kinexys platform, with transfer of units between clients, collateral use and continuous treasury management cited as the intended applications; BlackRock had launched tokenised European money market fund share classes on a comparable basis days earlier. In the same week, Wells Fargo announced tokenised deposits for selected corporate and commercial clients — beginning with US dollar and sterling transfers on the bank's own blockchain, scheduled to widen through 2027, and explicitly positioned as remaining inside the regulated, insured banking system.

Two things are worth noting about that cluster. Bank-operated permissioned platforms, rather than public networks, are carrying this activity. And in each case the same institution sits at several points in the chain — J.P. Morgan is both the tokenisation platform and the existing transfer agent — which is an answer to the question of who maintains the definitive record, and a concentration worth being conscious of.

The common thread deserves emphasis, because it is the opposite of how tokenisation was originally sold. These are not new asset classes. They are existing, well-understood, conservatively regulated instruments being issued and moved on a different set of rails. That is a far more modest claim — and a far more credible one.

Institutional survey work points the same way. In the 2026 EY-Parthenon and Coinbase institutional investor survey, conducted in January 2026 across 351 institutions globally — asset managers, asset owners, hedge funds, private banks, family offices and venture firms — 63% of respondents reported interest in investing in tokenised assets, and 61% expected tokenisation to have a significant effect on trading, clearing and settlement over a three-to-five-year horizon. Stated intent is not deployment, and the distance between the two is where most of the interesting questions live.

What is actually being tokenised

It is worth being concrete, because “real-world asset tokenisation” is a category broad enough to be meaningless. The activity with genuine institutional momentum clusters in a handful of places, and they have something in common: the underlying instrument is already liquid, already regulated, or already suffers from an operational process everyone finds tedious.

Money market funds and cash-equivalent vehicles — the most active area. A tokenised share class does not change the fund; it changes how units are registered, transferred and, increasingly, used as collateral. The appeal is that a yield-bearing instrument becomes mobile within the trading day.
Bank deposits — a tokenised deposit is a claim on a regulated bank, recorded on a ledger the bank operates. For corporate treasurers the attraction is transfers and liquidity management outside conventional clearing windows, with programmability layered on top.
Government and corporate bonds — issuance on distributed ledgers has moved from novelty to routine for some issuers, with the benefit concentrated in settlement and servicing rather than in distribution.
Private-market assets — private credit, fund interests, real estate and infrastructure. Here the appeal is administrative: transfer, register maintenance and investor servicing in asset classes where those processes are manual and slow. The liquidity claim in this segment is the one that most warrants scrutiny.
Collateral and repo — arguably the most consequential application, and the least discussed publicly. Moving high-quality collateral between counterparties in minutes rather than days changes intraday liquidity management in a way that is measurable.

The institutional case

Strip away the marketing and a coherent, unglamorous argument remains. It is largely an argument about operations, and it is stronger for being narrow.

Settlement speed and certainty — delivery and payment can be made conditional on each other and executed together, removing the window in which one party has delivered and the other has not. The benefit is not merely speed; it is the elimination of a specific exposure.
Collateral mobility — the ability to move collateral intraday, and to use a yield-bearing instrument as collateral without first redeeming it, releases liquidity that is currently trapped by settlement timetables.
Automated servicing — distributions, corporate actions, fee calculations and eligibility rules can be encoded into the instrument rather than reconciled between institutions afterwards. Much of the cost in fund operations sits in that reconciliation.
Operational fractionalisation — smaller minimum denominations become administratively viable, which matters more for portfolio construction and collateral optimisation than for retail access.
Continuous operation — instruments that can move outside conventional market hours suit treasury and collateral functions that do not stop at five o'clock, and organisations that operate across time zones.
Auditability — a single shared record that participants can each verify reduces the reconciliation burden between counterparties, custodians and administrators, which is where a great deal of operational risk actually sits.

Tokenisation does not create liquidity

This is the point at which careful analysis and product marketing part company, and it is the single most important distinction in the subject.

A token is a representation of ownership. Liquidity is the presence of willing buyers and sellers, price discovery, market makers prepared to hold inventory, and an infrastructure those participants can actually reach. The first does not produce the second. Putting an illiquid asset on a distributed ledger produces an illiquid asset on a distributed ledger.

The risk this creates is a liquidity illusion. An instrument that can technically be transferred at any hour may be presented as more liquid than its underlying supports. A tokenised private credit fund is still a private credit fund: its redemption terms, gates and valuation cycle govern, and the token changes the administration of a transfer rather than the existence of a counterparty willing to take the other side under stress. The moment that matters is not the ordinary one; it is the moment when a number of holders want out simultaneously.

Where tokenisation has produced something closer to genuine liquidity, it is in assets that were already liquid — cash equivalents and high-quality collateral — and the improvement has been in the speed and certainty of transfer rather than in the depth of the market. That is a real benefit. It is a different benefit from the one usually advertised.

Stablecoins versus tokenised deposits

A tokenised trade still has to be paid for, and the instrument used to settle it determines what credit exposure is being taken. The distinctions here are frequently blurred and are worth stating plainly.

A tokenised deposit is a claim on a regulated bank, sitting on that bank's balance sheet within the existing prudential and deposit-protection framework. A regulated e-money token is a claim on its issuer against segregated reserves, redeemable at par, and in the European Union is regulated under the markets-in-crypto-assets framework. Other stablecoins vary considerably in reserve quality, disclosure, redemption rights and the jurisdiction of the entity standing behind them. Wholesale central bank money remains the theoretical settlement asset of choice and is still limited in practical availability.

The practical consequence is easy to state and easy to overlook: settling both legs of a transaction simultaneously removes the risk that one party delivers and the other does not. It does not remove the credit risk of the instrument you now hold. An institution that has eliminated settlement risk and taken on an unsecured claim against a lightly regulated issuer has moved its exposure rather than reduced it.

The unresolved infrastructure problem

A fair assessment has to give the open questions the same weight as the benefits. Several are genuinely unresolved, and they are the reason adoption is proceeding asset class by asset class rather than all at once.

Interoperability — activity is spread across bank-operated platforms, market-infrastructure networks and public chains that do not naturally communicate. Fragmenting a market across incompatible venues is a well-understood way of destroying liquidity, and it is currently the direction of travel.
Custody and key management — control of a token is control of the asset. This makes custody arrangements, key ceremonies, recovery procedures and segregation more consequential than in a conventional book-entry system, not less.
The definitive record — if a ledger entry and a transfer agent's register disagree, one of them is right as a matter of law. Jurisdictions have addressed this to differing degrees. Luxembourg has legislated in stages since 2019 to give securities registered through distributed ledgers the same legal standing as conventional book-entry holdings, and the European Union's DLT pilot regime allows market infrastructures to operate under targeted exemptions. Elsewhere the position is less settled.
Identity, permissioning and privacy — institutional participants need to know their counterparty and to satisfy anti-money-laundering obligations, while not publishing their positions to competitors. These requirements pull in opposite directions on a shared ledger.
Governance — who can change the rules of the network, admit or exclude a participant, or reverse an erroneous transaction, and under what accountability. On a bank-operated platform this is a commercial and legal question rather than a technical one.
Regulatory perimeter — a tokenised security is a security. In the European Union it falls under existing securities and settlement law rather than the crypto-asset regime, which applies to crypto-assets not already covered elsewhere. The technology does not change the classification, and treating it as though it does is a recurring source of confusion.
Insolvency and failure — what happens to holders if the platform operator, the custodian or the issuer fails, and whether the token holder has a proprietary claim or merely a contractual one. This question is asked far too rarely and answered far too late.

What this means for allocators

For a professional investor, the useful analysis is not whether an asset is on a distributed ledger. It is whether the structure around it is sound — which is the same standard applied to any other vehicle, asked in slightly different words.

Six questions do most of the work, and a product that cannot answer them clearly has told you something important:

What legal right does the token actually represent — direct ownership of the underlying, a claim against an issuing vehicle, or a contractual exposure to its performance?
Who maintains the definitive record of ownership, and what happens if the ledger and the register disagree?
How is the asset custodied and transferred, who holds the keys, and how is client property segregated?
Where does real liquidity exist — a genuine secondary market, or redemption at the underlying vehicle's terms and cycle?
What happens on a technology failure, a network outage, or the insolvency of the platform operator, custodian or issuer?
Which entity is regulated, for what activity, and in which jurisdiction — and does that regulation cover the specific risk you are taking?

Block Asset Management

How Block Asset Management sees the transition

We expect tokenisation to be absorbed into existing financial infrastructure gradually rather than to replace it, beginning where settlement, collateral mobility and continuous operation deliver a benefit that can be measured. Our role is to hold new infrastructure to established standards rather than to relax the standards because the infrastructure is new.

Structure before technology

We assess a tokenised vehicle the way we assess any other: legal ownership, custody, valuation, liquidity terms, counterparties and governance. The ledger is an implementation detail, not a due diligence answer.

Liquidity assessed, not assumed

We distinguish between an instrument that can be transferred and a market that can absorb a sale. Redemption terms, secondary depth and behaviour under stress are what we test.

A Luxembourg perspective

As a Luxembourg-domiciled manager we work within a framework that has legislated deliberately for distributed-ledger securities, which shapes how we read questions of legal finality and investor protection.

Operational due diligence that includes the rails

Where an external manager or vehicle depends on a tokenisation platform, that platform's custody model, governance and failure modes form part of our operational assessment.

Governed access for professional investors

Professional and qualified investors reach this asset class through defined risk limits, continuous monitoring and a controlled, auditable process — regardless of the rails an instrument settles on.

Tokenisation is unlikely to replace existing financial infrastructure in a single step. The more probable path is gradual absorption into it, starting with the assets and processes where faster settlement, collateral mobility and continuous operation produce a benefit clear enough to justify the change. That is a slower and less dramatic story than the one told a few years ago, and it is considerably more likely to be true.

The distinction worth carrying is between representation and market. Issuing a token proves that an asset can be recorded and moved differently. It says nothing about whether anyone will buy it, at what price, or on whose balance sheet the risk ultimately sits. Those remain the questions, and they are the same questions professional investors have always asked.

If your organisation is considering how these developments bear on a digital asset allocation, our investor relations team would be glad to discuss our approach. Professional and qualified investors can also register for access to our detailed strategy materials.

Important information

This material is provided for information purposes only and is intended for professional and qualified investors. It is commentary on technology and market infrastructure developments and is not legal, tax or investment advice, nor an offer, solicitation or recommendation of any strategy, financial instrument or service. References to asset classes, market participants, technologies or regulatory frameworks are illustrative and general in nature, do not constitute a view on any specific asset, issuer or platform, and should not be relied upon as a statement of the applicable law in any jurisdiction. Digital assets are volatile and involve significant risk, including the possible loss of the entire amount invested. Past performance is not a reliable indicator of future results.

Monthly Market Pulse

Market updates & research

Receive Block Asset Management's periodic market commentary and research on digital assets and systematic strategies. Concise, professional, and straight to your inbox.

Subscribe to our investor updates

Request Information Register for access