Alt Investments
Tokenization Is No Threat To Traditional Finance – It’s The Future

The "old" worlds of finance, including fixed income, have much to learn from new fields such as tokenization and the use of distributed ledger technology.
The author of this article, Jesse Knutson, writes that global capital markets have been uniquely resistant to meaningful technological change, but embracing blockchain to tokenize assets can make the difference for issuers and investors alike.
The trend of tokenization of assets has been underway for some time, and we have written about the topic, for example as it relates to gold. The editors are pleased to share these comments; the usual editorial disclaimers apply. To comment and get involved in the conversation, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com.
Beyond the noise, volatility and price swings of cryptocurrency
markets is tokenized securities, a nascent asset class that is
powered by the underlying technology associated with
cryptocurrencies such as bitcoin.
Physical and financial assets, from real estate to US Treasury
Bills, can be tokenized using blockchain technology, meaning that
a digital representation of the asset is created which can
be exchanged securely among investors in real time.
Some areas of capital markets infrastructure have been resistant
to internet-era technological changes. Major financial markets
conversely require central depositories, delayed settlement and
have limited trading hours.
Tokenization is the first genuine opportunity the world has had
in generations to rethink finance, modernise and do things
differently. For decades, governments, businesses and
individuals – particularly in emerging economies and
industries – have struggled to access capital through legacy
markets and organisations. Tokenization actively removes these
barriers to change the global landscape for both issuers of
capital and investors in such assets.
Issuers are given a more direct link to their investors, creating
significant operational efficiencies and cost savings, while
investors gain a far greater degree of flexibility and freedom of
use.
Why tokenize assets in the first place?
Tokenized assets are digital representations, often described as
“tokens,” of an underlying asset that is listed on
regulated platforms. For instance, a tokenized bond retains all
traditional bond characteristics, such as principal, interest
rate and maturity date, but is issued, represented and traded
using blockchain technology rather than paper certificates or
centralised electronic records like its traditional
counterpart.
Blockchain is a secure, decentralised ledger that stores records
across a network of multiple computers. This allows issuers and
investors to verify ownership, payment history and asset
performance in real time. This level of transparency reduces
information asymmetry, which is often a key driver of fear and
volatility for investors in the murky markets that have been
prevalent as of late.
The disintermediation also ensures that investors seeking to
re-allocate their capital can do so through instant settlement or
trading on liquid secondary markets, which can be critical during
times of market flux.
Identifying opportunities in the tokenized
market
To give an idea of how these tokens are behaving in the current
market, there are tokens that invest in short-term US Treasury
Bills, which have notably been less affected by recent market
volatility. In fact, the total market cap of tokenized US
Treasuries as at 1 April 2025 was $5.12 billion – as at 20
May 2025, the figure now sits at $7.00 billion, representing a 37
per cent increase despite the tariff saga (1).
These tokens can attract investors who may typically struggle to
access US Treasuries directly due to geographical restrictions.
With low minimum tickets to invest in the primary market, retail
and institutional investors alike can often access, and even
trade, these assets on secondary markets.
Meanwhile, small- to mid-sized governments and businesses are
issuing compelling tokenized securities that are accessible to
all types of investors, some of which offer coupons with returns
ranging from 8 per cent to 15 per cent with typically
sub-five-year maturities.
Thoughtful innovation outsmarts unfounded
scepticism
It is no secret that some segments of the traditional financial
world remain sceptical about tokenization.
Despite real-world examples of successful tokenized issuances,
vocal naysayers continue to express scepticism about the
slower-than-anticipated uptake of tokenization in today’s
financial markets, with McKinsey & Company reporting a base case
market size of $2 trillion for tokenized assets by 2030 as broad
adoption is “still far away.” (2).
Some institutions and regulators remain in “wait and see” mode,
while concerns over blockchain’s feasibility and complexity have
been raised by others.
No technological system is perfect, but blockchain’s
functionality and potential to modernise global capital markets
is undeniable.
In the US, for example, pressure is growing – including from
the likes of Larry Fink – for the SEC to put in place clear rules
and regulations for tokenized securities (3). There is a
good chance that this will happen during President Trump’s term
and, if this is the case, it could provide the catalyst for
exponential growth of tokenized securities.
Tokenization provides an opportunity to update the technology
behind capital markets and increase access to capital globally.
Rather than being problematic, blockchain is ready and fit for
purpose to deliver the scale, efficiency and privacy controls
required to leverage the benefits of tokenization and provide an
alternative investment opportunity for discerning investors.
There is a lot that the old world can learn from the new, and
financial markets, regulators and policymakers must embrace new
technology as we move forward into a new era of finance.
The author
Jesse Knutson is head of operations at Bitfinex Securities,
where he is responsible for expanding the platform’s issuance
pipeline, overseeing distribution and building its user base
while ensuring compliance with regulatory standards. Prior to
this role, Knutson served as vice president of financial products
at Blockstream, in addition to equities and trading roles at
Macquarie Group and Barclays respectively.
1, RWA.xyz | Tokenized US Treasuries
2, Tokenized financial assets: From pilot to scale |
McKinsey
3, BlackRock CEO wants SEC to ‘rapidly approve’
tokenization of bonds, stocks: What it means for crypto