Chan Boon Hiong, applied industry innovation lead and head of securities market and technology advocacy, Asia Pacific at Deutsche Bank, explained that while international standards such as those from the Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO), the Principles for Financial Market Infrastructures (PFMI), the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision “provided a solid baseline for safety, integrity and systemic risk management,” they were not designed for “frictionless cross-border scale.” Global standards and the limits of harmonisation He pointed out that even if global conduct requirements existed, “when applied through local legal lenses, the same product would fragment into multiple compliance versions.” He gave the example of a United States dollar-denominated stablecoin issued in New York that complied with the New York Department of Financial Services regime. Once circulated in Europe, Singapore or Hong Kong, it would be subject to entirely different requirements. Chan stressed that legal characterisation remained one of the most serious fractures: “Is a token property in go-to-scale markets? Without clarity, investor protection, custody segregation, and enforcement become non-portable across borders, undermining scale.” He added that deeper sovereignty issues made harmonisation harder, noting that today’s digital economy depended heavily on a few foreign cloud providers, globally dispersed blockchain developer communities and United States dollar-backed reserves in stablecoins. These dependencies, he argued, amplified “digital strategic dependency” risks. He emphasised that alignment across property law, insolvency treatment and settlement finality would require “multi-year statutory reform and judicial interpretation.” He cautioned that neither the European Union, which guarded the euro, nor the United States, which leveraged global sanctions, nor emerging markets with capital-flow controls, would “cede lightly in the name of harmonisation”. In game-theory terms, Chan predicted “club” and “satellite” equilibria: a handful of markets with sufficient depth, such as New York, Hong Kong and the European Union, would dominate product development, while lighter-touch venues would survive as satellites “bridged with costs.” Scaling, he concluded, was “not impossible—but costly.” Rational issuers and investors would tailor products for jurisdictions where “wallet size, legal certainty, operational resilience, and supervisory cooperation make scale worth the price”. The net outcome, he argued, would not be uniform global harmonisation but “minimum common standards plus local overlays where fragmentation is managed and not eliminated.” In his words: “Globally, there will be tokenised markets and markets that are not.” Rewiring foreign exchange, collateral and settlement Chan asserted that tokenised finance had the potential to “fundamentally reshape foreign exchange (FX), collateral and settlement by compressing trading, clearing and settlement into near-instant, programmable processes.” He explained that “custody accounts turn into wallets, enabling custody functions to operate beyond the traditional boundaries of an institution”. In this world, he noted, “revenue rents tied to time, opacity, and operational friction disappear. They are replaced by fees tied to speed, programmability, credit, liquidity and data.” He emphasised that incumbents would have to pivot from “custody reporting and reconciliation expertise to liquidity, credit intermediation, collateral and compliance-tech to remain relevant in the upcoming era of tokenisation”. He highlighted how market structures could reorder, with new entrants offering programmable liquidity and compliance-embedded code gaining traction. “We can already see this happening in tokenised funds like US’ Securitize and in FX like Singapore’s Partior,” he remarked. For clients, the benefits were speed and certainty, but he cautioned that this required adaptation to new counterparties and higher automation demands in a “code-driven machine speed universe”. Chan argued that tokenisation could even “delete” two long-standing risks: counterparty settlement risk through atomic payment versus payment (PvP) and delivery versus payment (DvP), and reconciliation errors through shared ledgers. However, he warned that new risks were emerging, including “dependency on cryptographic keys, cybersecurity risks, and governance of smart contracts.” Asset servicers, he noted, had to be “fit-for-purpose in an environment where events can unfold too fast for ex-post human intervention.” Compliance and supervisory tools, he added, would need to evolve “towards real-time”. To illustrate the shift, Chan cited examples such as intraday FX swaps settling within hours rather than two days (T+2), enabling treasurers to dynamically manage liquidity. Similarly, collateral could be mobilised instantly across venues, supporting automated margining or intraday repurchase agreements (repos). The net result, he concluded, was “a faster, leaner but risk-shifted ecosystem where efficiency and client outcomes are enhanced but demands new clarity and capabilities on legal finality, custody and cyber-resilience”. He also pointed to the changing value drivers: float income from cash pipelines would give way to liquidity provision fees for instant funding, custody and safekeeping fees would be augmented by programmable collateral services, and reconciliation fees would be replaced by compliance-embedded code and code governance services. Data analytics monetisation from on-chain flows, he suggested, would become a new line of business. Tokenised deposits, stablecoins and CBDCs — coexistence, not substitution When asked to compare tokenised deposits, stablecoins and central bank digital currencies, Chan replied that “each [was] built to solve a different use case and [was] best in that own space.” He explained that tokenised deposits extended “commercial-bank money onto programmable rails, and should retain deposit law, prudential rules, and deposit insurance.” Their strength, he added, lay in “bank-network payments, treasury and wholesale settlement,” but they operated in “walled gardens—fungible with other deposits within the same bank or consortium, but not frictionlessly portable across banks or borders”. By contrast, stablecoins offered “open-ecosystem cash on public blockchains, interoperable across wallets, decentralised finance (DeFi) and platforms.” They excelled in cross-platform commerce and crypto markets. Yet, Chan warned, “fungibility of coins from different issuers is conditional as price can be different even if they are pegged to the same underlying instruments albeit not in the same allocations.” Moreover, he noted, they were “not cash, not money and not securities” but fell into new regulatory verticals. CBDCs, he observed, put “digital central-bank trust and monetary policies on programmable rails, maximising confidence and singleness of money.” However, he remarked that “most are yet to be on public chains for broader reach”. The differences mattered in practice. Chan used cross-border e-commerce as an example: “A buyer paying a platform and small and medium-sized enterprise (SME) sellers via tokenised deposits can settle instantly if all bank inside the same network. Stablecoins can span borders and wallets, enabling faster and cheaper payouts to global SMEs, but expose sellers to last-mile redemption, FX conversion, and off-ramp risks. Regulations will also inhibit stablecoin’s freedom of cross-border uses. A CBDC corridor ensures time-tested acceptance for finality”. He also examined second-order impacts. “Stablecoin growth drives demand for reserve assets like Treasury bills (T-bills) which can shift yields and its use in supply chains can disintermediate some roles of a bank,” he argued. Meanwhile, tokenised deposits and CBDCs “should compress settlement layers and transaction fee pools.” Ultimately, he stressed, “their future is not about substitution but co-existence according to where they fit best for participants. Each instrument type would be fungible within itself, but only partially across each other, with differences in trust reach and programmability”. The Sibos agenda in Frankfurt Chan’s reflections set clear expectations for Sibos 2025 in Frankfurt. The industry’s focus would not be on whether tokenisation mattered, but on how to scale it safely and profitably under divergent legal and supervisory regimes. Participants should expect hard discussions on fragmented standards, programmable liquidity, atomic settlement, compliance embedded in code, and the coexistence of tokenised deposits, stablecoins and CBDCs. His message was pragmatic: tokenised finance promised efficiency, speed and new value drivers, but it required clarity on legal finality, robust cyber-resilience, and an acceptance that fragmentation was here to stay. As he put it, scaling was “not impossible—but costly,” and the winners would be those who chose their battles wisely.
