The tokenisation of financial assets has been a widely discussed concept for years, heralded as a game-changer for global finance. Despite the enthusiasm, progress has been gradual, and real-world adoption has lagged behind the initial hype. However, the landscape is now shifting, and Zodia Markets is taking a leading role in shaping this transformation. As an early investor in a tokenised US Treasuries fund launched by Libeara in collaboration with Wellington Management and FundBridge Capital, we are making a concrete step into this new ecosystem. This marks the beginning of our journey into tokenisation, a global effort that will redefine how assets are issued, traded, and managed.

The State of Tokenisation Today

Tokenisation has long been seen as the next evolution of financial markets, promising to bring enhanced efficiency, accessibility, and liquidity to a wide range of asset classes. Today, we see progress in multiple areas:

• Regulatory Clarity: Jurisdictions like Singapore, Switzerland, and the EU have begun to implement frameworks that allow for compliant issuance and trading of tokenised assets. Jersey, in particular, has established a robust tokenisation framework that allows for regulated issuance and management of digital assets within a well-defined legal and regulatory perimeter.
• Institutional Adoption: Traditional financial institutions are increasingly exploring tokenised securities, bonds, and funds, with major players such as BlackRock, JPMorgan, and Fidelity making strategic moves in the space.
• Infrastructure Development: Platforms supporting tokenisation—custody, settlement, and secondary trading—are maturing, enabling the institutional adoption of digital assets in a more structured and scalable way.
• Liquidity Challenges: While tokenisation offers liquidity potential, secondary markets remain in their infancy, requiring active participation from liquidity providers to ensure depth and efficiency.

Despite this progress, tokenisation has yet to prove itself as a superior alternative to traditional financial infrastructure. To date, access to tokenised assets has been more complicated, slower, and often more expensive in terms of fees compared to conventional money market funds and other established financial products. This has hindered widespread adoption and limited the ability of tokenisation to deliver on its promise of transforming financial markets.

Regulatory Barriers and KYC Challenges

One of the key regulatory challenges facing tokenisation today is the inefficiency in Know Your Customer (KYC) requirements for fund holders. In some jurisdictions, regulations mandate that every holder of a tokenised asset must undergo KYC verification directly by the fund manager, with no allowance for brokerage holders or intermediary verification. This results in an unnecessarily cumbersome process that increases friction for investors, significantly limiting accessibility and scalability.

This regulatory approach contradicts traditional finance, where brokers and custodians play a key role in conducting KYC and onboarding investors efficiently. By restricting the ability of brokerages to onboard and manage KYC for tokenised asset holders, these regulations reduce the efficiency gains that tokenisation is meant to deliver. The increased administrative burden, cost, and lack of flexibility make tokenised fund structures less attractive compared to their traditional counterparts.

At Zodia Markets, we recognise that this is a major barrier to adoption, and we are actively working to address this inefficiency. We will be engaging with regulators, industry participants, and technology providers to develop solutions that align with best practices from traditional financial markets while ensuring compliance and security. By advocating for a more streamlined KYC process that allows for brokerage-based verification and tiered access controls, we believe that tokenisation can realise its full potential in providing greater financial inclusion and market efficiency.

The Vision for Tokenised Assets and Stablecoins

At Zodia Markets, we see tokenisation as a fundamental pillar of the future of global financial markets, particularly when combined with the rise of stablecoins. Together, these innovations have the potential to create a more efficient, transparent, and accessible financial ecosystem, not just for financial assets but also for real-world assets (RWAs):

• 24/7 Markets: Unlike traditional finance, tokenised assets and stablecoins can be traded around the clock, improving efficiency and accessibility.
• Fractional Ownership: Tokenisation enables fractionalised investment, allowing broader participation and lowering barriers to entry for institutional and retail investors alike.
• Interoperability: As different financial ecosystems become interconnected, tokenised assets will be transferable across networks, unlocking new possibilities for composability in DeFi and TradFi.
• Enhanced Transparency and Settlement Efficiency: With on-chain settlement, counterparty risks are significantly reduced, and settlement times can be shortened from days to minutes.
• Stablecoins as the Foundation: Tokenisation alone is not enough—stablecoins provide the liquidity and medium of exchange necessary for seamless transactions in the digital asset economy, ensuring that tokenised assets can be efficiently traded and settled.
• Complementing the Growth of Stablecoins and RWAs: We see tokenisation as a natural complement to the already immense growth of stablecoins. Stablecoins have demonstrated their utility by providing a reliable, digital-native medium of exchange, and tokenisation will further build upon this foundation by unlocking new opportunities for asset ownership, collateralisation, and financial market innovation. Real-world assets, such as real estate, commodities, and infrastructure investments, can also be tokenised, bringing greater efficiency, transparency, and liquidity to traditionally illiquid markets.

Despite these advantages, adoption challenges remain. Regulatory uncertainty, fragmented infrastructure, and concerns over compliance and security continue to slow progress. However, as institutions build trust in the technology and regulatory frameworks solidify, we expect an acceleration in adoption.

Conclusion

Tokenisation is no longer just a theoretical concept—it is happening now, and the momentum is building. However, for tokenisation to truly transform financial markets, it must address its current inefficiencies, ensuring it becomes a more seamless, cost-effective, and scalable solution than traditional finance. Stablecoins will play a crucial role in this transition, providing the liquidity backbone needed to unlock the full potential of tokenised assets. We see tokenisation as the natural next step to complement the rapid growth of stablecoins, enhancing their role as the foundation for a new era of digital finance, while also unlocking real-world asset markets for broader participation and efficiency.

At Zodia Markets, we are not just observing this evolution; we are actively participating in and shaping its future. Our journey begins with this early fund, but our vision extends far beyond, towards a financial ecosystem where efficiency, liquidity, and accessibility are redefined. The path to widespread adoption may still have challenges, but with each milestone, we move closer to a tokenised future.

We look forward to being a core part of this change in collaboration with our clients, partners, and regulators to make this vision a reality.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with professional advisors before making any investment decisions.

Zodia Markets (Jersey) Limited (No. 125434) is registered in Jersey and supervised by the Jersey Financial Services Commission as a Virtual Asset Services Provider and for the conduct of Investment Business (Class A), Firm Reference IB7800. Registered address: No 1 Grenville Street, St Helier JE2 4UF.