Asset Tokenization in Capital Markets A Primer
Asset tokenization in capital markets is a technological leap that is similar to other past technological changes that have shaped the financial industry. In this primer, we explore the implications of this change and offer deep dives at the asset class level.
In many ways, asset tokenization is just another technological leap, conceptually similar to other technological changes that have shaped the financial industry in the past, such as the change from paper-based securities to digitalized records. It is primarily supply-side driven, with value derived mainly from greater efficiency and lower costs. And, as with prior technological leaps, asset tokenization also has the potential to transform markets.
In this primer, we explore how this transformation applies to different asset classes and what this shift could mean for the macro economy, the financial industry, and decisions at the level of the individual investor. Deep dives into individual asset classes follow this broad overview.
For years digital ledger technology (DLT) such as blockchain has been associated with cryptocurrency. This is no longer true. The technology is making its way into mainstream finance. A multi-year industry survey by the International Securities Services Association suggests a clear trend, with over one-third of respondents saying that they have live DLT and digital assets projects (Figure 1).