Asset Tokenization Financial Markets: The WEF 2025 Report Guide

What Is Asset Tokenization and Why It Matters Now

Asset tokenization financial markets are undergoing one of the most consequential shifts in how the global economy manages ownership, settlement, and value exchange. According to the World Economic Forum’s 2025 report on asset tokenization, this process uses programmable ledgers — including distributed ledger technology (DLT) and blockchain systems — to digitally represent the ownership of financial assets in transferable formats. The report, produced in collaboration with Accenture, draws on interviews with more than 60 experts, analysis of over 75 industry reports, and input from a community of more than 200 expert members representing more than 100 institutions worldwide.

Financial markets today rely on fragmented, message-based integrations to reconcile ownership and transfers across independent networks. This architecture, which traces back to the dematerialization era of the 1980s through 2010s, replaced paper certificates with electronic book-entry systems but introduced new dependencies on intermediaries and kept settlement cycles hovering at T+2. Asset tokenization in financial markets offers a fundamentally different model: unified systems of record, flexible custody arrangements, and on-chain governance that can enable real-time settlement, fractional ownership, and asset composability.

The timing of this shift is significant. As the WEF report notes, global stakeholders are now commonly distinguishing between attention-grabbing cryptocurrencies and the underlying technology, fuelling a renewed era of public-private cooperation focused on scaling tokenization in a safe and compliant manner. Government authorities including the UK’s HM Treasury, the US CFTC, and the Hong Kong Monetary Authority are progressively endorsing tokenized financial products, signaling that regulatory momentum is building alongside technological maturity.

For investors and institutions looking to understand the implications of this transformation, the Libertify Interactive Library provides in-depth resources on digital asset trends and emerging market structures.

Five Differentiating Features of Tokenized Financial Assets

The WEF 2025 report identifies five technical differentiators that define the value proposition of asset tokenization in financial markets. These features go beyond incremental improvements to existing systems — they represent structural capabilities enabled by programmable ledgers that cannot be replicated by conventional financial infrastructure.

Shared system of record is the first and perhaps most fundamental differentiator. By introducing a unified, tamper-resistant ledger that securely records and verifies asset ownership, history, and rights, tokenization drives information symmetry and eliminates the need for multiple self-contained databases that lead to manual reconciliations, errors, and delays. Unlike conventional systems where financial institutions use electronic messaging to coordinate transactions and update separate books and records, a shared on-chain record establishes unambiguous cryptographic proof of the state of every transaction.

Flexible custodial arrangements enable user-centricity by providing a spectrum of custody models: from full third-party custody for institutional clients requiring regulatory compliance, to collaborative and shared custody using multi-signature or multi-party computation, to hosted or embedded custody via APIs, to full self-custody through private keys. This range of options grants end users greater control over their digital assets while addressing different risk tolerances and regulatory requirements.

Programmability transforms automation from point solutions to strategic orchestration by embedding predefined conditions into assets. Smart contracts can automate complex financial transactions, corporate actions, and compliance checks directly on the ledger, reducing operational costs and processing times. The Bank for International Settlements has noted that this capability extends the scope of automation well beyond what conventional messaging-based systems can achieve.

Asset fractionalization expands accessibility by enabling any asset to be divided into micro-units of ownership under various custodial models. This reduces administrative burdens and lowers minimum investment thresholds, making previously exclusive asset classes available to a broader range of investors. Composability rounds out the five features by enabling multi-asset mobility — allowing assets to be integrated, reused, and transferred across platforms, unlocking new possibilities for collateral optimization and multi-party settlement.

Tokenization Models: Backed Tokens vs. Native Tokens

Understanding the distinction between backed and native token models is essential for any participant in tokenized financial markets. The WEF report establishes a clear taxonomy based on three viewpoints: proof of value, proof of ownership, and proof of transaction.

Backed tokens are issued on-chain but reference an underlying off-chain asset. The asset is issued off-chain first, and the token represents a claim on or digitized version of that reference asset. Value is driven by issuer credibility, ownership is evidenced by on-chain records, and custody involves qualified custodians. These tokens may be redeemable for the reference asset or its par value. Public equities and gold-backed tokens like Paxos’ PAXG and Tether’s XAUT are examples of this model.

Native tokens, in contrast, are issued and exist entirely on-chain with no reference asset. Sovereign digital bonds represent an emerging example, where the instrument itself is born natively on the programmable ledger. This model offers the full benefits of on-chain settlement, flexible custodial arrangements, and programmability without the operational complexity of maintaining synchronization with off-chain systems.

The report acknowledges important legal and operational dynamics that influence both models. Property and ownership rights assigned to assets outside programmable ledgers remain legally uncertain in many jurisdictions, and clear rules must be established for reconciling counterparties’ books and records against the programmable ledger. Backed tokens face additional complexity around proof of value — requiring off-chain third-party audits and careful management of liquidity pools to ensure sufficient backing.

Six token attributes make financial asset tokens more transparent, secure, and efficient: asset definition (identifying the underlying asset), embedded rights (legal and economic entitlements), provenance history (tamper-proof audit trail), ownership status (current holder information), compliance rules (regulatory conditions encoded in the token), and permission controls (smart contract-based user action restrictions). Discover how these emerging digital asset structures are reshaping traditional markets in our guide to the Deloitte tokenization analysis.

Asset Tokenization in Bond and Fixed-Income Markets

Fixed-income securities represent the most advanced frontier for asset tokenization in financial markets. The global bond market, valued at approximately $140.7 trillion in 2023, is seeing notable advances across sovereign, corporate, and municipal bonds. According to an OMFIF survey of 26 financial institutions, 65% believed bonds were the most likely to be tokenized — and the data supports this conviction.

The European Investment Bank (EIB) has been a pioneer in this space, issuing several bonds on-chain since its inaugural digital bond on Ethereum in 2021. By 2024, the EIB had issued five bonds, most recently using HSBC’s Orion platform for issuance and the Banque de France’s DL3S platform for settlement. Global issuance of DLT-based bonds reached €1.3 billion by August 2024, with the EU accounting for 38% of issuance volume, followed by APAC at 31%, and the US at 21%.

The cost savings are measurable and significant. Tokenized bonds have demonstrated lowered underwriting fees by an average of 0.22% of the bond’s par value and reduced bid-ask spreads by 5.3% on average. DLT can automate up to 2,000 tasks in the bond issuance process — a process that typically takes up to 12 weeks — saving 800 to 1,000 person hours during issuance and reducing book-closing periods by more than 50%. These efficiencies compound when including retail investor participation.

Sovereign bond tokenization is gaining particular momentum. The UK’s HM Treasury has announced plans for a digital gilts pilot, the US CFTC has accepted tokenized treasuries as non-cash collateral, and Hong Kong’s government has committed to tokenized bond issuance as standard practice. The HKMA is preparing to issue a third tranche of tokenized bonds while exploring how to tokenize existing bonds in circulation.

Corporate bonds are following a similar trajectory. Societe Generale FORGE in France has demonstrated how tokenized corporate bonds can comply with regulatory requirements while benefiting from on-chain settlement efficiencies. Nomura’s partnership with BOOSTRY in Japan illustrates growing regulatory acceptance globally. The Six Digital Exchange (SDX) in Switzerland achieved more than 1 billion Swiss francs ($1.2 billion) in assets on its digital platform by May 2024, partly due to the availability of atomic settlement using tokenized central bank money through the Swiss National Bank’s wholesale CBDC pilot.

Tokenized Equities, Private Equity, and Alternative Assets

While bonds lead in tokenization adoption, equities and alternative assets present compelling opportunities across different market contexts. The global public equity market was valued at nearly $115 trillion in 2023, though the market capitalization of tokenized public stocks remained modest at approximately $16 million by March 2025. This reflects an important nuance: public equities in advanced economies already benefit from decades of technology modernization and proven intermediary chains, making the incremental value of tokenization less immediately apparent.

However, the WEF report identifies significant opportunities in emerging market economies where equity markets are less liquid and intermediary infrastructure is less mature. Tokenization could enable “leap-frogging” — allowing these markets to bypass legacy systems entirely and build on programmable ledger infrastructure from the ground up. Corporate actions alone represent capital markets’ largest unstructured data challenge, with more than 3.7 million event announcements annually in the US and costing each participant $3 to $5 million per year. Embedding IPO listing criteria and corporate action logic directly into tokens could dramatically reduce these costs.

Private equity stands out as an asset class ripe for tokenization. The global PE market reached approximately $5.3 trillion in 2023 and is projected to grow to $7 trillion by 2030, with roughly 10% expected to be tokenized by that same date. Remarkably, 73% of European fund managers anticipate PE will be the first asset class to experience significant tokenization, driven by needs for improved liquidity, transparency, and accessibility. In a notable example, ADDX tokenized units from Partners Group’s €5.5 billion PE fund in 2021, reducing minimum investments from $100,000-plus to as low as $10,000.

Private debt is equally promising. The global private credit market has surpassed $3 trillion in AUM, and on-chain lending protocols such as Maple, Goldfinch, and Centrifuge have already facilitated more than $13 billion in on-chain loans across public networks including Ethereum and Solana. KKR’s collaboration with Securitize to tokenize a segment of its $4 billion healthcare fund on Avalanche demonstrates institutional appetite for this approach.

Real estate and commodities round out the alternative asset categories covered by the WEF report. The global real estate market, valued at approximately $379.7 trillion in 2022, has seen between $4 billion and $20 billion brought on-chain — a fraction of the total addressable market. In commodities, tokenized gold products from Paxos (PAXG) and Tether (XAUT) account for 99% of the tokenized commodity market, demonstrating concentrated early adoption.

Collateral Management and Securities Financing

Collateral management may be where asset tokenization in financial markets delivers its most immediate and measurable impact. The global collateral market is estimated to be worth more than $25 trillion, while the global repo market exceeds $15 trillion in outstanding value with daily turnover of $3 to $4 trillion. These markets face persistent inefficiencies: manual and fragmented workflows relying on outdated systems, multiple intermediaries coordinating complex rapid buy-sell orders, and settlement cycles constrained by non-overlapping operating hours across custodians.

The WEF report highlights a striking finding: programmable ledger-powered collateral management could unlock more than $100 billion annually in capital that can be redeployed for higher efficiency. This figure alone makes a compelling business case for institutional adoption of tokenized collateral platforms.

Several major initiatives are already operational or in advanced pilots. JP Morgan’s Total Collateral Network (TCN) enables tokenized money market fund shares to be used as collateral in clearing and margining transactions. Fidelity International tokenized shares of a money market fund on Kinexys Digital Assets in 2024, demonstrating improved efficiency in delivering margin requirements. The Canton Global Collateral Network (GCN) and HQLAx are similarly addressing the challenge of orchestrating complex cross-custodian movements of collateral through real-time, compliant, and interoperable asset mobility.

Intraday repo has emerged as the primary area of tokenization adoption in securities financing. The high-frequency nature of repo markets — with daily turnover in the trillions — means even small efficiency gains translate to enormous absolute savings. Tokenization’s shared system of record addresses a critical pain point: money market funds cannot currently be used directly as collateral because of data reconciliation challenges driven by their complex ownership structures. By providing visibility into custodial relationships with underlying fund owners, tokenized systems reduce the burden of managing relationships between transfer agents, custodians, and counterparties.

Composability adds another dimension to collateral optimization. A pilot on the Canton Network with Euroclear and the World Gold Council found that gold-backed tokens allow freer usage as collateral without traditional storage limitations. SDX and SIX Securities Services have developed the Digital Collateral Service (DCS), designed to enable selected crypto-assets as collateral alongside traditional instruments. Explore how leading institutions are implementing these innovations in the McKinsey tokenization analysis on our platform.

Asset Tokenization Barriers: Infrastructure, Standards, and Interoperability

Despite the compelling value proposition, the WEF report identifies five significant barriers that must be overcome for asset tokenization in financial markets to achieve scale. Understanding these barriers is as important as understanding the technology itself, because they determine the pace and pattern of adoption across different regions and asset classes.

Legacy infrastructure integration remains the most immediate challenge. Financial services institutions must reconcile between the books and records of tokenized systems and their internal books, potentially resulting in discrepancies or disputes on the official claim of an asset. The report recommends a staged approach — using existing investments in supranational networks to secure transactions between traditional and tokenized systems. Chainlink, Swift, and UBS Asset Management have demonstrated this approach by enabling tokenized fund transactions via Swift, reducing inefficiencies in the $63 trillion global mutual fund market.

Global standards fragmentation is another critical barrier. Estimates show 74% of DLT projects in 2023 had fewer than six participants, underscoring a need for wider collaboration. Financial institutions had adopted at least 72 distributed or programmable ledgers as of May 2025, creating a complex landscape where not all networks are inherently interoperable. Five critical areas require alignment: roles and responsibilities, token standards, the cash leg and settlement, cross-chain interoperability, and reference data.

Token standards illustrate this fragmentation well. While ERC-20 remains the dominant standard, it lacks built-in compliance features. Compliance-led alternatives like ERC-1400 (enhanced document management and investor protection) and ERC-3643 (embedded identity, KYC/AML, and transfer conditions) are gaining traction but have not yet achieved universal adoption.

Cross-chain interoperability is essential for seamless asset movement across the 72-plus distributed ledgers in use. Emerging solutions like Chainlink’s Cross-Chain Interoperability Protocol (CCIP), successfully tested with ANZ Bank for linking private and public ledgers, and LayerZero’s Omnichain Fungible Token (OFT) standard show promise but remain nascent. Secondary market liquidity remains insufficient, and privacy and compliance concerns — including data protection regulations like the EU’s GDPR “right to be forgotten” — add further complexity to on-chain deployment.

Regulatory Landscape and Financial Stability Considerations

The regulatory landscape for asset tokenization in financial markets is evolving rapidly, with significant developments across major jurisdictions. The WEF report examines how policy-makers are balancing innovation enablement with financial stability protection, creating a patchwork of frameworks that will shape the adoption trajectory for years to come.

In Europe, the Markets in Crypto-Assets Regulation (MiCAR) represents the most comprehensive regulatory framework for digital assets globally. Token standards are increasingly evolving towards compatibility with MiCAR requirements, and the European Investment Bank’s active issuance program demonstrates that tokenized instruments can operate within existing regulatory frameworks. The Hong Kong Monetary Authority has taken a similarly proactive approach, convening a Programmability Working Group in 2024 to develop common standards for programmability at scale.

The United States has signaled growing acceptance through pragmatic regulatory actions. The CFTC’s acceptance of tokenized treasuries as non-cash collateral is a landmark decision that legitimizes tokenized assets within existing financial market infrastructure. The US Treasury has acknowledged potential operational benefits of tokenization, and the Federal Reserve continues to research wholesale CBDC applications that could serve as settlement assets for tokenized transactions.

Financial stability considerations are front and center in regulatory thinking. The WEF report highlights cybersecurity as a primary concern — the risk of third-party providers being attacked with malicious code and bypassing security measures could have systemic implications in tokenized markets. The “paradox of programmability” poses another stability risk: smart contracts are constrained in their ability to adapt to market events such as contagion effects, potentially introducing systemic risk when market conditions deteriorate rapidly.

Operational risks around private key management, the potential for “limitless composability” to create unstable derivative structures, and the challenges of managing 24/7 trading windows alongside traditional Monday-to-Friday markets all require careful regulatory consideration. The report emphasizes that transitioning financial markets from fixed-trade windows and regional frameworks to continuous, global operations requires a practical, phased approach with sustained public-private coordination.

The Future of Asset Tokenization in Financial Markets

The trajectory of asset tokenization in financial markets points toward a fundamental transformation of how the global economy operates — but the path is neither linear nor guaranteed. The WEF 2025 report concludes with a clear-eyed assessment: while barriers remain, momentum continues to build, and the convergence of institutional adoption, regulatory clarity, and technological maturity suggests the industry is approaching an inflection point.

The numbers tell a compelling growth story. Tokenized US Treasuries have surged from $104 million to $5 billion in market capitalization since 2023. Global DLT-based bond issuance is accelerating across regions. Institutional heavyweights including BlackRock (with its BUIDL fund), Franklin Templeton (BENJI), Fidelity International, and JP Morgan are deploying real products on tokenized infrastructure, not just running pilots. The PE and venture capital market is projected to reach $7 trillion by 2030, with roughly 10% tokenized.

Settlement assets are evolving in parallel. The digital money continuum described in the WEF report spans wholesale central bank digital currencies, deposit tokens, reserve-backed digital currencies, fiat-backed stablecoins, and native crypto-assets. Each carries different risk profiles and use cases, and the choice of settlement asset will significantly influence the architecture of tokenized markets. Wholesale CBDC pilots by the Swiss National Bank, the Banque de France, and the Hong Kong Monetary Authority are establishing the public money infrastructure that many market participants view as essential for institutional-grade tokenized settlement.

For organizations navigating this transition, several strategic priorities emerge. First, focus on asset classes where tokenization delivers the greatest incremental value — bonds, collateral management, and private markets — rather than trying to tokenize already-efficient public equity markets. Second, invest in interoperability solutions and participate in standard-setting initiatives to avoid being locked into isolated ecosystems. Third, engage proactively with regulators who are increasingly open to collaboration on responsible tokenization frameworks.

The WEF’s multistakeholder approach — involving more than 100 institutions, a 10-member steering committee from leading financial institutions and technology companies, and workshops across London, Singapore, and San Francisco — reflects the breadth of coordination needed. Asset tokenization in financial markets has the potential to unlock the next generation of value exchange, but realizing that potential requires sustained effort across the public and private sectors. The institutions and economies that move earliest and most thoughtfully will be best positioned to capture the benefits of this transformation. For a deeper interactive exploration of this WEF report and similar analyses, visit the Libertify Interactive Library.