The rise of tokenisation in trad-fi

Traditional finance companies are suddenly now paying a lot more attention to one of cryptocurrency’s oldest use cases- tokenisation.

Last year, Blackrock, the world’s largest asset manager, called tokenisation the ‘next generation of markets’.

Yet, tokenisation is nothing new. It’s been around for years, even before the recent market crashes.

So why are traditional finance companies now taking notice?

For one, tokenisation never really died out- it remains one of the most compelling use-cases of blockchain technology. Trading of securities and foreign exchange has traditionally had to be carried out manually by exchanges and brokers, which can result in delays.

Tokenising these products and trading them on the blockchain, however, can mean reducing this delay significantly, and allow traders to get more out of the same activities that they have already been carrying out on a daily basis.

Cryptocurrency advocates have also made more headway in recent years, given that blockchain and cryptocurrency have been placed on more solid footing.

Colin Butler, Polygon's tokenisation lead, also attributed the change of heart to cultural changes.

“There’s actually hardcore blockchain believers in all of these large Trad-Fi firms now. It basically took that amount of years for them to advocate, for this to percolate to the top, and for the top to even consider it.”

More than just tokenisation, however, the trend seems to be that Trad-Fi companies are beginning to see what blockchain technology and cryptocurrency can really do, and moving to take advantage of it.

Just last month, Blackrock led a wave of Bitcoin ETF applications in the US.

And more recently, a spot Bitcoin ETF went live in Amsterdam.

Governments are also partnering with private sector companies to experiment with blockchain technology. At last year’s Singapore Fintech Festival, executives from JP Morgan, DBS, and SBI Digital Asset Holdings showcased how tokenisation and blockchain technology would be able to improve trading as part of Project Guardian, a collaborative initiative between the Monetary Authority of Singapore and the financial industry.

With the entrance of companies like Blackrock and JP Morgan into the blockchain and cryptocurrency space, it seems that the next generation of adopters have identified themselves- Trad-Fi companies are here, and here to stay.