As cyber threats rise and the demand for seamless digital transactions grows, the financial industry is turning to blockchain and tokenisation to create a more secure and transparent ecosystem. Tokenisation is emerging as a critical link between traditional and decentralised finance, enabling greater efficiency, security and accessibility. By transforming how assets are issued, traded and managed, it is reshaping banking, asset management and financial inclusion. The expanding role of tokenisation in finance Tokenisation, the process of converting real-world assets into digital tokens on a blockchain, is rapidly gaining traction in the financial sector. Manal Rifki, director of roaming wholesale at Rakuten Mobile, underscored its immense potential, describing it as "a $33 trillion opportunity backed by tangible, real-world assets." She added that tokenisation is “disrupting real assets, providing liquidity, real-time settlement and clarity for investors." This shift is already moving towards practical applications. Rifki pointed to leading institutions such as BlackRock and UBS, which are developing their own tokenised funds. These initiatives signify a shift from experimentation to real-world use with significant market potential. Blockchain’s potential to strengthen trust in digital finance Blockchain’s immutable and transparent nature makes it a strong foundation for trust in digital financial systems. David Gyori, international resource director of TAB Global, highlighted this synergy, stating, "Security and transparency are not opposites but together. Blockchain is a very good technology to tie these two things together". He envisioned a future where permissioned infrastructure blockchains securely store critical data, such as digital identities and medical records. Gyori also introduced the concept of "super chains”. which would allow precise control over who can access information, when, and for what purpose, demonstrating the depth of security blockchain can provide. Gyori provided a real-world example of how blockchain can improve data security and control by referencing the common process of sharing a passport for identity verification. He cited a blockchain solution that lets users control access to their passport information, allowing them to grant or revoke permissions as needed. This could transform the management of personal and financial data by reducing fraud and enhancing privacy. However, it also raises important questions about user privacy and the regulatory frameworks required to safeguard personal data. Greater trust and efficiency through smart contracts Smart contracts —self-executing agreements written in code and stored on the blockchain — streamline transactions by eliminating intermediaries and reducing the potential for disputes. Kazushi Yamamoto, a respected academic and expert in blockchain and law, emphasised that contracts are the foundation of all financial dealings: "Every big project will have everything recorded in the end. The contract matters." He pointed out that smart contracts provide a "more efficient" way to build trust and credit. Yamamoto drew a comparison between the traditional Japanese hanko personal seal and blockchain, explaining that just as the hanko authenticates paper documents, blockchain offers a verifiable record for digital agreements. However, he also stressed the need for records to validate contracts made on blockchain. “On a blockchain, the fact and norms will be aligned, but outside the blockchain system, someone could still act outside of the contract recorded on the blockchain.” This highlights the ongoing need for legal frameworks to complement blockchain solutions. Gyori expanded on the future role of smart contracts, particularly with the rise of agentic artificial intelligence (AI), and how such AI systems may impact the creation of machine-to-machine contracts. He speculated that such contracts would likely take the form of "software-driven parametric self-executing smart contracts," enabling automated, machine-to-machine transactions. This advancement raises complex ethical and legal concerns, particularly around accountability when autonomous systems execute agreements without human oversight. Integrating tokenisation into mainstream finance Financial institutions considering to adopt blockchain and tokenisation face significant regulatory and operational challenges. Majid Lotfi Ghahroud, a consultant at Glocal Platform for Urban Finance (GPUF) and Fintech Strategy, emphasised the need for a robust regulatory framework to build trust in digital assets. He said, "To build trust in digital assets, banks must integrate them within a regulated framework, offering secure, insured custody services and partnering with companies that comply with anti-money laundering (AML) and know your customer (KYC) regulations.” He highlighted that consumer education, through transparent risk disclosure and financial literacy initiatives, is vital to overcome scepticism. Rather than replacing traditional banking, Ghahroud sees a future where digital assets complement existing financial systems, driving innovation in payments while maintaining regulatory stability. Tsuyoshi Oyama, chief executive officer of RAF Laboratory, discussed the challenges traditional banks face when integrating tokenisation into legacy systems. He warned that "the biggest concerns are the potential loss of trust and confidence in the bank, money laundering, and the potential mis-selling of products to wealthy, older investors who often have lower financial literacy.” In contrast, emerging banks may find it easier to enter this space, as they are not burdened with the established consumer trust built by traditional banks. Rifki highlighted the growing industry collaboration on digital asset projects: "We're seeing how central banks, commercial banks and leading fintech companies are taking initiatives all together on projects." This cooperative approach fosters innovation while creating a “safe sandbox” where digital finance can evolve in line with regulatory and banking standards. She cited initiatives such as the Hong Kong Monetary Authority's (HKMA) work on a tokenised Hong Kong dollar stablecoin for cross-border payments as a model of proactive engagement by financial institutions. In Japan, Oyama highlighted the significant effort required to upgrade systems for open banking and integrate technologies like generative AI. While Japan is cautiously piloting projects such as the Digital Yen, its approach remains conservative, particularly given concerns around de-dollarisation. De-dollarisation refers to the potential decline of the United States dollar as the world's primary reserve currency, a trend that some believe could be accelerated by the rise of alternative digital currencies and payment systems. The way forward in digital finance The future of finance, either through blockchain or tokenisation, will depend on collaboration, innovation, and the strategic adoption of these technologies within existing financial frameworks. While challenges remain, particularly in scalability, regulation and integration with legacy systems, the transformative potential of blockchain and tokenisation is evident. However, progress will require a shift towards interconnected ecosystems where central banks, commercial banks, and fintech firms work together to drive financial innovation. At the same time, financial institutions must also navigate a fragmented regulatory landscape, with different rules and requirements across different jurisdictions. Key concerns include data privacy regulations, such as the General Data Protection Regulation (GDPR), AML laws, and securities regulations, which may need to be adapted to suit the unique characteristics of tokenised assets and blockchain-based transactions. Tokenisation can be implemented without disrupting legacy systems by taking a phased approach. Banks could begin with pilot projects in areas such as digital bonds, tokenised deposits or asset-backed securities, while ensuring regulatory compliance and interoperability with existing systems. Financial institutions can thrive not just by adapting but also by proactively innovating and collaborating to shape the future of tokenised finance.
