How tokenisation unlocks ‘US$3 trillion opportunity’ in Asia’s retail investment market

Financial hubs in Asia are exploring a potentially lucrative new investment opportunity - digital tokens for real-world assets such as carbon credits, palm oil, premium wine, and even art. Private firms are actively investigating tokenisation as a method to make these niche markets accessible to millions of small retail investors. Stephen Richardson, managing director of financial markets and head of APAC at digital-asset infrastructure-provider Fireblocks, explains that the process of buying and investing in art is currently challenging, with only a select few wealthy investors able to participate. However, tokenisation allows for the fractionalisation of art, breaking a piece worth US$10 million into a thousand parts, enabling a retail investor with a passion for art to invest in it.

Digital tokens encapsulate a set of data that can be traded on blockchains, decentralised, distributed digital data ledgers shared across a network of computers. Advocates argue that this makes tampering with transactions, which are almost instantaneous, much more difficult. Transactions are automatically recorded on the blockchain, and the immutability and transparency provided by blockchain technology helps ensure the authenticity of each token's stated history. Financial players have primarily viewed the investment opportunity through two lenses - traditional financial assets such as bonds, gold, and real estate, and copyrighted music, art, fine wine, and the like.

The tokenisation of real-world assets is underpinned by their inherent value, as determined by well-regulated markets, in contrast to non-fungible tokens that are usually traded on private markets that may not be well regulated. Industry executives believe that the connection to Asia's markets, with their abundant oversight, will result in fewer upheavals over the long term, despite previous cryptocurrency scandals. The consensus is that the markets are moving in one direction, with momentum continuing to build. Regulators in Singapore and Hong Kong, as well as other global regulators, are working diligently to provide more clarity to the tokenisation framework domestically.