The Future of Tokenised Asset Trading on Blockchains

Tokenised Asset Trading: Current Landscape

Trading stocks and bonds on blockchains holds significant potential for transforming the financial landscape. Tokenised assets, which are digital representations of underlying assets, are traded on distributed ledger technology (DLT) similar to that used for cryptocurrencies. This approach promises faster, cheaper, and more transparent trading. Yet, the realization of this potential largely hinges on the establishment of a global standard for cross-border blockchain activity.

Challenges in Blockchain Interoperability

A major hurdle in achieving seamless asset movement across blockchains is the lack of cohesive global regulation. The current fragmented regulatory environment means that assets are not moving as smoothly as they could across different blockchains. Industry experts highlight that progress in tokenising assets is slow, with uptake still limited due to varied client and compliance requirements across different jurisdictions.

Necessity for Global Standards

The report highlights the importance of industry-accepted standards for risk assessments to facilitate the adoption of blockchain-based trading. However, there is a cautionary note against developing standards prematurely, as this might stifle innovation or lead to outdated solutions. Establishing a global standard is essential for enabling interoperability and accelerating the adoption of tokenised assets.

Future Outlook for Digital Assets

Despite current challenges, financial institutions like Northern Trust anticipate significant growth in the digital assets market. By 2030, the market is expected to grow to between 5% and 10% of the $13 trillion of assets under custody. Presently, approximately $85.12 billion worth of assets, including government securities and stablecoins, are tokenised.

In summary, while the tokenised asset trading on blockchains presents a promising future, achieving its full potential depends on overcoming regulatory challenges and establishing global standards for interoperability.