Tokenisation Improves Financial Market Efficiency

What if the future of finance wasn’t just about money but ownership? 42% of institutional respondents cite lower fees and transaction costs as tokenisation’s top benefit, while the IMF estimates 50% savings on cross-border flows promising faster, more efficient markets.

Tokenisation turns traditional assets into blockchain-based digital tokens, enabling fractional ownership, instant transfers and transparent records. 31% of institutions highlight immutability and transparency as major advantages, reducing operational risks and reliance on intermediaries while improving trust, traceability and confidence for both investors and institutions.

By 2030, 5–10% of all assets could be tokenised, unlocking multi-trillion-dollar pools of liquidity. Even a small share moving on-chain creates new tradable markets, expands access and reshapes capital flows, risk management and market efficiency, signaling a transformative era for finance.

1. Streamlining Settlement and Clearing

Tokenisation replaces multi-step settlement processes with near-instantaneous blockchain verification. You experience fewer delays and lower counterparty risk because assets are transferred immediately, bypassing traditional clearing houses. This reduces the capital requirements of market participants and prevents the settlement failures that have historically created systemic vulnerabilities.

Higher settlement efficiency also enables more frequent trading and better resource allocation. Reconciliation processes are simplified because all participants have access to the same immutable ledger. Reduced errors and shorter settlement cycles lead to lower costs and improved market reliability, creating a more resilient financial system for investors and institutions alike.

• Immediate verification of ownership

• Reduced operational and counterparty risk

• Lower capital tied up during settlements

• Elimination of settlement backlogs

How could instantaneous settlement influence market volatility and what operational costs might firms save? Does faster clearing encourage more active trading strategies?

Key takeaway: Faster, automated settlement enhances liquidity and stability, reducing systemic risk in financial markets.

2. Cutting Costs by Removing Middlemen

Using tokenisation, you avoid multiple intermediaries in financial processes, which lowers fees and reduces administrative work. Blockchain protocols handle verification and transfers automatically, cutting transaction costs and making smaller-scale investments worthwhile for both investors and issuers.

With automated compliance and reporting, you save time and reduce manual effort, leading to operational efficiencies beyond just fee reductions. Micro-investments become feasable, opening the door to broader participation and more inclusive financial ecosystems. Lower overheads also free up capital, allowing for better allocation, stronger market dynamics and improved price discovery.

• Fewer brokers and custodians required

• Automated compliance and verification

• Reduced operational overheads

• Enabling micro-investments

Which operational costs do intermediaries add and how does removing them affect market participation? Could smaller investors gain meaningful access previously reserved for institutions?

Key takeaway: Disintermediation lowers costs, increases accessibility and makes financial markets more efficient.

"Everything will be tokenized and connected by a blockchain one day." – Fred Ehrsam (Co-Founder Coinbase)

3. Enhancing Transparency and Trust

Blockchain-based tokenisation provides a tamper-proof record of asset ownership. Transactions can be audited in real time, which improves accountability and helps to meet regulatory requirements. Transparent records reduce fraud, misreporting and disputes, creating a more reliable environment for investors and regulators alike.

With immutable ownership histories and automated reporting, monitoring and enforcement become easier. Investors gain confidence, while regulators get access to accurate, timely data. The added trust and transparency also facilitate smoother cross-border transactions, since counterparties can independently verify details without relying on opaque intermediaries, thereby strengthening overall market integrity.

• Real-time auditing of transactions

• Immutable ownership history

• Reduced risk of fraud or disputes

• Easier regulatory compliance

How might increased transparency affect investor confidence and what compliance processes could be simplified? Could this encourage cross-border investments previously hampered by trust issues?

Key takeaway: Transparent, immutable records reduce inefficiencies and build trust, supporting smoother and more reliable markets.

4. Unlocking Liquidity in Illiquid Markets

With tokenisation, you can trade assets that were once illiquid - like real estate or private equity - in fractional units. This opens access to markets that used to be restricted, boosts liquidity and makes dynamic pricing possible. Dormant assets can then be activated through secondary markets, creating new opportunities for investment.

Because dynamic pricing allows easier entry and exit, capital is allocated more efficiently. As more investors gain access, market depth expands, which supports stronger price discovery and sparks innovation in financial products. The result is a wider range of investment channels for both retail and institutional investors.

• Fractional ownership of traditionally illiquid assets

• Dynamic secondary markets

• Broader investor participation

• Efficient price discovery

Which markets could benefit most from enhanced liquidity and how might this change investment strategies? Could previously dormant assets become major drivers of market activity?

Key takeaway: Tokenisation transforms illiquid assets into tradable instruments, improving market efficiency and accessibility.

5. Supporting Regulatory Compliance and Risk Management

Smart contracts built into tokenised assets handle compliance automatically, cutting down the risk of human error. You get consistent application of regulatory rules, streamlined reporting and greater transparency over exposures. With real-time portfolio monitoring, you can manage risks more effectively and avoid costly surprises.

Continuous oversight also makes it easier to detect issues early and take proactive steps to mitigate them. Regulators gain instant access to accurate data, while firms can refine strategies with real-time insights. This automation not only reduces operational mistakes but also strengthens governance and builds a more resilient financial ecosystem that adapts to new risks.

• Automated compliance via smart contracts

• Continuous monitoring of risk exposures

• Transparent reporting for regulators

• Reduced operational errors

How does automation in compliance change the role of risk managers and what new regulatory challenges might arise? Could real-time risk visibility prevent financial crises?

Key takeaway: Automated compliance and risk monitoring strengthen governance, reduce errors and enhance market efficiency.

The Tokenization of Things | Matthew Roszak (Venture Capitalist)

Sample Case: BlackRock & BUIDL

In 2024, BlackRock launched BUIDL, a tokenised money market fund issued on public blockchain infrastructure. The fund represents real-world assets held off-chain, while ownership, transfers and settlement are handled on-chain in near real time.

By tokenising fund shares, BlackRock removed traditional settlement delays and enabled instant subscription and redemption. Institutional investors gained continuous visibility into holdings, automated compliance checks and faster liquidity compared to conventional fund structures that settle on T+1 or longer cycles.

The structure reduced operational friction, lowered reconciliation effort and improved transparency for investors and service providers. Rather than creating a new asset class, BlackRock used tokenisation to make an existing, highly regulated product more efficient and accessible.

Key takeaway: BlackRock did not use tokenisation to disrupt markets but to remove settlement delays, reduce operational overhead and improve transparency in traditional financial instruments.

"I believe the next generation for markets, the next generation for securities, will be tokenization of securities" - Larry Fink (CEO Blackrock)

Tokenisation is more than just a technical upgrade; it transforms how markets function by improving efficiency, reducing costs and widening access. Its impact on settlement, compliance and transparency signals a financial environment in which investors and institutions can operate with greater confidence and flexibility.

As these changes gather pace, the real test will be how well participants adapt. Will firms embrace automation to eliminate inefficiencies or will they hesitate due to regulatory uncertainties? Investors, meanwhile, have the opportunity to reconsider their portfolios in light of broader accessibility, while still balancing innovation with risk awareness and due diligence.