Key Takeaways
- • Schroders argues tokenisation is becoming necessary for asset managers to stay competitive, citing efficiency, transparency and broader access as core benefits.
- • A Calastone study found 37% of Asian respondents (asset managers, fund administrators, custodians and management companies) are already implementing tokenisation projects.
- • KPMG identifies Singapore, Hong Kong and Switzerland as emerging competitive hubs for asset tokenisation, supported by government backing, legal frameworks and market infrastructure.
- • Project Guardian, led by the Monetary Authority of Singapore, is running cross-jurisdictional pilots to develop standardised risk-management policies for tokenised markets.
- • Cybersecurity threats and potential increases in market volatility remain unresolved risks that the article says require adapted regulatory frameworks and industry collaboration.
Summary
In an article republished from The Business Times (Singapore, 19 July 2024), Schroders contends that tokenisation and blockchain are transforming asset management and that asset managers must embrace the technology to remain competitive. The firm says tokenisation enables fractionalisation of assets, making financial products more scalable and personalised, and lowers barriers to entry for a broader range of investors. Schroders notes that tech-savvy retail investors and institutional investors will be the first beneficiaries, with wider benefits expected as the technology matures.
Schroders describes several expected advantages. Funds are particularly well suited to tokenisation because of potential improvements in settlement time, distribution efficiency and intermediary reduction. Blockchain's immutable transaction records could improve transparency and help issuers with liability management. The article also argues that tokenisation will reduce value leakage across the financial value chain, eliminate constant data conversion between systems, and lower ownership costs. Citing a Calastone study, the article reports that 37% of Asian respondents are already implementing tokenisation projects, and states that Schroders is among firms tokenising traditional assets by placing them in digital wrappers.
Regulation is presented as decisive for the pace of adoption. Schroders says current rules provide a stable foundation but further development is needed. It calls for financial regulators to work with industry, and for governments to consider tax incentives, regulatory sandboxes and education initiatives. According to KPMG, Singapore, Hong Kong and Switzerland are emerging as competitive tokenisation hubs. The article highlights Project Guardian, led by the Monetary Authority of Singapore, which brings together associations, financial institutions and regulators in pilots across asset classes to develop standardised protocols for managing risk.
The article acknowledges risks including cybersecurity threats and potential market volatility, and calls for enhanced cross-border regulatory cooperation, referencing collaboration with policymakers in Japan, Switzerland and the United Kingdom. Schroders concludes that tokenisation can reshape financial markets, though the transition will take time.
Schroders describes several expected advantages. Funds are particularly well suited to tokenisation because of potential improvements in settlement time, distribution efficiency and intermediary reduction. Blockchain's immutable transaction records could improve transparency and help issuers with liability management. The article also argues that tokenisation will reduce value leakage across the financial value chain, eliminate constant data conversion between systems, and lower ownership costs. Citing a Calastone study, the article reports that 37% of Asian respondents are already implementing tokenisation projects, and states that Schroders is among firms tokenising traditional assets by placing them in digital wrappers.
Regulation is presented as decisive for the pace of adoption. Schroders says current rules provide a stable foundation but further development is needed. It calls for financial regulators to work with industry, and for governments to consider tax incentives, regulatory sandboxes and education initiatives. According to KPMG, Singapore, Hong Kong and Switzerland are emerging as competitive tokenisation hubs. The article highlights Project Guardian, led by the Monetary Authority of Singapore, which brings together associations, financial institutions and regulators in pilots across asset classes to develop standardised protocols for managing risk.
The article acknowledges risks including cybersecurity threats and potential market volatility, and calls for enhanced cross-border regulatory cooperation, referencing collaboration with policymakers in Japan, Switzerland and the United Kingdom. Schroders concludes that tokenisation can reshape financial markets, though the transition will take time.
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