TOKEN2049 in Singapore brings together financial institutions, market infrastructure providers, technology companies and digital asset firms. The discussions centre on tokenisation, interoperability, collateral, payments and the future of institutional on-chain markets. Those subjects are closely related and point to a problem financial institutions face: valuable assets are held across systems that do not easily connect. On-chain assets are only the first step Putting an asset on-chain does not solve that problem by itself because a tokenised bond may still be isolated from the systems used for collateral, repo, payments and custody. The Bank for International Settlements identifies the lack of interoperability between existing systems and emerging tokenised infrastructure as a key constraint on broader adoption. Transferring the asset may require separate connections, manual reconciliation and pre-funded accounts. Transactions may also be constrained by settlement windows and the operating hours of the institutions involved. The result is familiar: collateral can sit in the wrong place and liquidity can be held back while operations teams reconcile records across systems and institutions maintain multiple connections that perform similar functions. As finance moves on-chain, the challenge is connecting independently governed markets, assets and applications. Financial institutions also need privacy, legal certainty, resilience and control over their data. The International Monetary Fund recognises legal certainty and robust governance as foundational to the development of tokenised finance. Institutions also need to determine who can use their applications and who can access transaction data. They need infrastructure that fits within their risk-management and regulatory obligations. The opportunity, then, is to combine the connectivity and programmability demonstrated by decentralised finance with the controls required by traditional finance. Why the connecting layer must be neutral Connecting financial markets through infrastructure owned by one bank, exchange or technology company could replace today’s silos with new ones. The owner of that infrastructure might influence who can connect, which products receive support, how fees are set and how the system develops. Other institutions would be asked to build important parts of their business on rules ultimately controlled by a commercial counterparty. As shared infrastructure becomes more important, neutral governance is critical to institutional adoption. It can prevent any single institution from controlling a service on which others may come to depend. Neutrality means that the rules are transparent and cannot be changed by one participant to suit its own commercial interests. This is critical because financial institutions need to remain responsible for their own businesses. A bank, exchange or market infrastructure provider should be able to operate its application under its own governance, apply its own controls and decide how its data is shared. Network applications should likewise be able to transact across the network without handing control of the application or its data to a central platform. Transaction information should be shared with the parties entitled to see it rather than broadcast to every participant. That creates a different model for financial infrastructure, allowing institutions to connect when there is a business reason to do so without first moving their activity onto one common platform. Avoiding siloed markets Such an approach also makes tokenised assets more useful. A digital bond can connect to a repo application, the repo can settle against a tokenised deposit or stablecoin, and the collateral can subsequently be used in another eligible transaction, subject to the controls of the institutions involved. Each connection adds utility without requiring all participants to adopt the same application or surrender their autonomy. This is particularly relevant across Asia, where markets have different currencies, regulations, operating models and stages of digital-asset development. For example, a Singapore-based asset manager might want to use a tokenised Japanese government bond as collateral in a financing transaction with a Hong Kong bank. The asset, collateral and payment systems would need to work together across currencies and jurisdictions, while each institution retained its own controls and responsibility for meeting relevant market requirements. The aim should be to build shared, neutral infrastructure that connects fragmented markets and independently governed applications while allowing institutions to retain their privacy, control and autonomy. As traditional and decentralised finance converge, the governance of the connecting layer will determine whether institutions are willing to rely on it. Neutrality therefore needs to be built into the infrastructure from the outset. Viv Diwakar is Head of the Canton Foundation, an independent, non-profit body that oversees governance of the Global Synchronizer, the decentralised system connecting the Canton Network.
