Category: Capital Markets & Macro | Published: 2 July 2026 | Author: Sofia Lindqvist, Head of Digital Assets, Securities Services, BNP Paribas UK
After several years of experimentation, tokenisation in institutional finance has reached a more sober and considerably more useful phase. The speculative noise has receded. What remains is a set of practical questions about whether distributed ledger technology can make post-trade processes faster, cheaper and less operationally risky than the infrastructure they would replace. Increasingly, in specific and well-defined use cases, the answer is yes.
What tokenisation actually changes
A tokenised security is a claim recorded on a distributed ledger rather than in a conventional register. That sounds like a technical detail, and in isolation it is. The consequences, however, are structural. When the record of ownership and the mechanism of transfer occupy the same infrastructure, several long-standing frictions in securities servicing begin to dissolve.
- Settlement compression. Delivery versus payment can occur atomically β both legs simultaneously, or neither. This eliminates settlement risk within the transaction rather than mitigating it afterwards.
- Reconciliation reduction. Where counterparties reference a shared record, the substantial industry effort devoted to reconciling separate books diminishes materially.
- Programmable corporate actions. Coupon payments, redemptions and distributions can execute automatically according to embedded logic, reducing manual processing and associated error rates.
- Fractionalisation. Assets with high minimum denominations become divisible, potentially widening the investor base for instruments that have historically been inaccessible.
Where adoption is real today
Money market funds and collateral
Tokenised money market fund units used as collateral represent the most commercially compelling live use case. Moving collateral in minutes rather than days reduces the buffers institutions must hold, freeing balance sheet capacity in a way that is directly measurable. Several major asset managers now offer tokenised share classes, and the collateral use case is what is driving genuine institutional volume.
Bond issuance
Digital bond issuance has progressed from single showcase transactions to repeat programmes, including issuance by supranationals, sovereigns and major corporates. Settlement times have compressed and issuance costs have fallen. The principal remaining constraint is secondary market liquidity, which requires a critical mass of participants operating on compatible infrastructure.
Private markets
Private equity, private credit and real estate funds involve heavy manual administration β capital calls, distributions, transfer approvals, investor onboarding. These are strong candidates for programmable automation, and the illiquidity of the underlying assets means the absence of a deep secondary market is less of an obstacle than in public markets.
The genuine obstacles
Realism is essential. Three constraints continue to govern the pace of adoption.
Legal certainty. The enforceability of tokenised ownership varies by jurisdiction. The UK has made encouraging progress in recognising digital assets as property, but cross-border transactions still require careful structuring and clear legal opinions.
Interoperability. A proliferation of private, non-communicating ledgers reproduces the fragmentation the technology was meant to solve. Standards work β and the emergence of neutral, shared infrastructure β matters far more than any individual platform.
Cash on ledger. Atomic settlement requires a settlement asset on the same ledger. Central bank digital currency, tokenised commercial bank money and regulated stablecoins each offer routes forward, and this remains the single most important unresolved dependency.
The custodian's evolving role
Tokenisation does not remove the need for a custodian. It changes what the custodian does. Safekeeping cryptographic keys, validating on-chain transactions, providing asset servicing across both tokenised and conventional holdings, and delivering a single consolidated view of a portfolio spanning both worlds β these are demanding responsibilities requiring institutional-grade controls.
For most asset owners, the transition will be gradual and hybrid. Portfolios will contain conventional and tokenised assets simultaneously for many years. The practical requirement is a servicing provider capable of operating credibly across both, without forcing clients to choose.
What institutional investors should do
- Identify the operational pain, then assess the technology. Collateral mobility and private markets administration are the areas where the case is strongest today.
- Insist on legal clarity. Understand precisely what you own and how it is enforced before committing capital.
- Favour open standards. Avoid infrastructure that locks assets into a single closed platform.
- Engage your custodian early. Servicing capability, not issuance capability, determines whether tokenised holdings are workable at scale.
The next chapter for securities services will be written in infrastructure rather than headlines. Our commitment is to build it carefully β with the resilience, controls and client protection that institutional investors are entitled to expect from a bank that has safeguarded assets for generations.