The Future of Tokenization at Sibos 2024

At the recent Sibos 2024 in Beijing, we were honored to participate in discussions about digital finance and the future of money. Over the course of three days, we engaged in thought-provoking conversations with the global financial community.

Our co-founder and head of protocol Jim Zhang spoke on the “Insights into the Future of Tokenization” panel. Alongside panelists from Progmat, Inc., CACEIS, and SWIFT, he explored how tokenization and blockchain-based programmability are transforming finance, unlocking new opportunities for capital efficiency, and network interoperability. Here are some key takeaways from the session:

1. Unlocking Liquidity through Tokenization

‍Tokenization—the process of representing real-world assets like cash, bonds, and other securities as digital tokens on a blockchain—allows financial institutions to automate the rules governing these assets through programmable smart contracts. With tokenized assets, institutions can streamline complex settlement processes that once required manual reconciliation and extensive intraday liquidity buffers. Smart contracts make it possible to enforce real-time settlement, reducing the time it takes to settle transactions and freeing up cash that can now be allocated to revenue-generating opportunities. This has broad implications for capital markets, especially for assets traded in high volumes like government bonds, as well as applications in cash management and trade finance.

2. Combating Fragmented Liquidity with Interoperability‍

While blockchain is a powerful tool for transparency and automation, the current landscape risks becoming fragmented as various networks and protocols emerge. This leads to digital “islands,” where assets are locked within individual blockchains, potentially limiting cross-network liquidity and usability. Because of this, there are many industry initiatives focusing on interoperability such as GL1, the Guardian Wholesale Network (GWN), and Project Agorá by the BIS. These projects are working on solutions that bridge different blockchain environments in order to ensure that assets and transactions can move freely across platforms so that liquidity is shared rather than isolated. This is essential for the long-term success of tokenization as interoperable networks are critical to ensure liquidity and usability across borders and asset classes.

3. Regulatory Progress in Key Jurisdictions‍

Regulatory frameworks are essential for digital assets to become mainstream. Key jurisdictions like the EU, Brazil, and Singapore are pioneering regulatory initiatives that provide guidance for digital securities and tokenized assets. The EU, for example, is advancing digital securities legislation through the EU Pilot Regime and the Markets in Crypto-Assets (MiCA) regulation, which set the stage for digital assets within established financial rules. In Singapore, the government is embracing blockchain and tokenization, proactively working with financial institutions to understand what policy shifts are necessary for adoption. These regulatory developments build trust and mitigate risk, supporting institutional adoption of tokenized assets while creating the legal backbone for scalable, compliant blockchain solutions.

4. 2024 as a Milestone Year for Adoption‍

With the active involvement of central banks, financial institutions, and industry leaders, 2024 is proving to be a critical year for digital asset adoption. Many jurisdictions are finalizing regulations, while central banks explore CBDCs (Central Bank Digital Currencies) that align with industry-led blockchain solutions. The increased participation of central banks in discussions around tokenized assets and digital currencies is crucial, as their regulatory authority and monetary policy roles help create stable environments for tokenization. This year, industry stakeholders have gained a clearer understanding of what’s needed to implement blockchain at scale, driving momentum for real-world applications in wholesale payments, securities, and even cross-border trade.

These discussions and insights at Sibos 2024 underscore the potential of tokenization to reshape finance on a fundamental level. We look forward to carrying these conversations forward, as well as exploring the evolving landscape of digital finance, at Sibos 2025 in Frankfurt!