Tokenisation grew to become a hot topic during 2025 and we don’t see signs of interest in tokenising assets slowing down. In this post, we’ve explained what “tokenisation” means, described some of its real-world use cases to date and our expectations for the year ahead.
What’s in a name?
The tokenisation of real-world assets refers to the process of converting ownership rights over assets such as real estate, art, commodities, currency, government and corporate bonds into digital tokens on a DLT-based blockchain. A digital certificate of ownership is then created that can be instantly traded, managed, and fractionalised. The term “tokenisation” can also be used in relation to native cryptoassets which are similar to well-known assets (e.g., tokenised bonds, digital artwork) – i.e., where there is no underlying asset to be tokenised, but the native cryptoasset is the only thing that exists.
At present, there is no consistent legal regulatory treatment of tokenised assets across jurisdictions; we expect movement towards a coherent and unified position, but progress will likely be slow due to the fragmented nature of existing rules and guidance.
The future is now
The purported benefits of a tokenised world include the potential to reduce costs (especially in the event of disintermediation), increase speed of transactions and develop interoperability with payment tokens on the same rails. In a tokenised world, every ownership change is immutably recorded on ledgers (see our October 2025 blog post). However, despite the potential for disintermediation, the convergence of increasing regulatory clarity, institutional adoption and technical maturity has also resulted in the proliferation of asset tokenisation platforms (see our June 2025 blog post). Tokenised custody solutions, trading infrastructure and distribution channels are also steadily making their way into the financial ecosystem.
Tokenisation is already starting to be used for commercial reasons and we predict that trajectory will continue. For example, Franklin Templeton has developed the Benji Technology Platform, a blockchain-integrated stack designed to facilitate trading, management, and administration of token-based investments; they also obtained regulatory approval to launch the first retail tokenised fund in Singapore in 2025. BlackRock is also prioritising tokenised ETFs; tokenisation was a key part of Larry Fink’s annual chairman’s letter in 2025. In the UK, Lloyds recently completed the first transaction of digital assets using tokenised deposits which were used to purchase a tokenised gilt and in June 2025, Luxembourg issued on-chain treasury certificates using HSBC’s Orion platform. In addition, UBS has developed UBS Tokenize as a full-service offering for digital asset services, opening the door to the world of DeFi to a broader range of market participants.
Tokenisation is being rolled out across a wide range of applications, from payments and deposits to bonds and funds, with the use of tokenised money market funds as collateral in financial transactions gaining traction as one of the leading use cases of tokenisation.
Legal and regulatory frameworks and predictions
As set out in our blog post, in the UK the FCA is taking steps to support tokenisation initiatives as part of its commitment to progressing its roadmap for digital assets. The FCA is supporting the adoption of tokenised fund registers through the Blueprint model, which allows firms to use DLT to run a tokenised register of fund unitholders within existing legal and regulatory rules, as part of its three-stage roadmap for tokenisation. At present, the FCA’s proposals apply to authorised funds only, without addressing unbacked assets, such as cryptocurrencies. The FCA is also exploring how DLT and tokenisation could support more personalised investment services, especially for younger retail investors who expect instant, direct access to their money. Additionally, the Bank of England and the FCA have launched the “Digital Securities Sandbox”, a regulated, live environment designed to explore how emerging technologies – including DLT – could support key financial market infrastructure functions such as the issuance, trading and settlement of digital securities (as mentioned in our May 2024 and October 2025 blog posts).
Some jurisdictions in the EU, including Germany, already have regimes in place that permit the native issuance of securities on DLT. The EU is also experimenting with new means of trading and settlement of DLT-based securities through its “DLT Pilot Regime”, a regulatory sandbox which has, so far, seen mixed success (see ESMA’s assessment here). The resulting lack of secondary market trading remains the biggest obstacle for market-wide adoption of DLT-based security trading in the EU at the moment. In order to overcome these issues, the EU Commission unveiled a new legislative proposal, the “Market Integration Package” (find our client briefing here) at the end of 2025. This proposal, if adopted, will significantly increase flexibility under the current DLT Pilot Regime and make it permanent. It will also amend the traditional EU regime for central securities depositories so that they can provide their settlement services in relation to DLT-based securities. Third, the ECB has announced to build upon their prior explanatory work on cash settlement solutions with central bank money that allow for delivery vs. payment for DLT-based securities and offer a pilot solution that links trading platforms and TARGET services in Q3/2026 (Pontes). In 2026, the ECB will also launch an exploratory initiative for a shared ledger bringing together central and commercial bank money and other assets on a single platform (Appia).
In the US, regulatory engagement around the topic of tokenisation has also been increasing and is expected to accelerate. The US SEC recently issued a non-action letter to The Depository Trust Company in relation to the launch of a pilot version of its securities tokenisation programme, which despite its non-binding nature and focus on a specific project, signals a willingness to allow tokenisation to further develop.
The Hong Kong Monetary Authority’s “Project Ensemble”, a sandbox to facilitate the region’s tokenised asset market, entered its pilot phase in late 2025. Participating banks and firms may explore utilising tokenised deposits in tokenised money market fund transactions, and manage liquidity and treasury needs in real time – which will gradually allow for interbank settlement of tokenised deposits in real time. Leading the charge, the Hong Kong government “will regularise the issuance of tokenised Government bonds”. We expect momentum to continue throughout 2026.
We also expect regulators to be focussed on interoperability risks which are emerging as tokenised money market funds become stablecoin reserve assets. This trend raises new challenges for market integrity and investor protection (see our briefing here for more information). In particular, the FCA has increased its focus on operational resilience. Extra security measures such as biometric authentication may therefore become essential to providers of tokenised assets in 2026, although such controls will be difficult to implement in practice given the fundamentally decentralised nature of tokenised transactions.