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In the swirling vortex of crypto narratives, few buzzwords ignite as much fervour as ‘tokenisation’. It is the promise of unlocking trillions in illiquid assets; real estate, art, equities, private credit; into programmable, 24/7 tradable digital tokens.
Yet, as with most revolutions, the path from proclamation to practice is paved with unglamourous toil. At a modest US$30 billion today, the real-world assets (RWAs) market remains a speck against trillion-dollar prophecies.
What separates the speculative froth from substantive progress? Discipline, infrastructure and a relentless focus on quality, said Andrew Scott, head of digital assets at Marketnode, a Singapore-based digital market infrastructure pioneer, on the sidelines of TOKEN2049 Singapore last week.
Scott, a veteran of hedge funds, investment banking and Web3, embodies the fusion of old-world rigour and new-age audacity. Marketnode, launched in 2021 as a joint venture between the Singapore Exchange (SGX) and sovereign wealth fund Temasek, positions itself as Asia’s answer to firms like Securitize. Backed by HSBC and Euroclear, marking the latter’s first foray into Web3, the company spans data services, funds orchestration, digital transfer agency and tokenisation.
“We’re not just a tech play,” Scott explained. “We’re the engine fuelling the journey to a future where finance is digital, automated and borderless.”
The RWA market’s adolescence is evident in its lopsided growth. Private credit and money market funds dominate the US$30 billion pie, but these successes pale against their traditional counterparts.
“We’ve got successes, but nowhere near scale,” Scott noted. Projections eye US$250-300 billion by 2030, yet the gap stems from a fundamental mismatch: many tokenised assets are mere “digital twins”, mirrors of off-chain originals, rather than natively digital instruments.
This hybridity inflates costs without delivering proportional benefits. A tokenised money market fund, for instance, can sometimes cost more than its vanilla version, deterring institutions already flush with access.
Building credibility blocks: Data discipline and digitally native design
Transforming RWAs into a credible institutional class demands bridging the chasm between crypto’s wild innovation and TradFi’s ironclad discipline.
Scott’s playbook starts with data integrity. Marketnode’s AI-driven data business tackles unstructured chaos (think thousands of daily faxes in legacy systems) and converting it into smart-contract-ready fuel.
“Before you automate, you need integrity,” he insisted. Only then can tokenisation elevate products: instant settlements, democratised access and true atomicity. High-quality RWAs are non-negotiable. Marketnode prioritises ‘pristine’ assets like top-rated gold or yielding funds, shunning low-hanging fruit that risks reputational scars.
This ethos counters the hype machine. Early tokenisation often chased novelty, fractional real estate with dubious rationale, over utility. “Just because everything can be tokenised doesn’t mean it should be today,” Scott quipped.
Instead, focus on pain points: structured products, long the bane of Asian markets with their opaque cycles and error-prone settlements. Tokenisation here slashes times, boosts transparency and invites retail into elite plays. Private credit, too, exemplifies democratisation. Once walled off for the ultra-wealthy, it is now investable for a broader cohort, including tokenised hedge funds.
APAC ascendancy: Why the region leads the tokenisation charge
APAC emerges as tokenisation’s competitive crucible, outpacing the U.S. and Europe not through tech supremacy but user dynamics and regulatory savvy.
Singapore and Hong Kong boast sound, disciplined watchdogs. The MAS granted Marketnode its CMS license this year. Crypto adoption across APAC surges 20-fold faster than in Europe, fuelled by a seismic wealth transfer to digitally native heirs.
Family offices, once tethered to real estate and funds, now crave diversification. “Receptiveness has turned to action,” Scott observed, especially via multi-family office aggregators prepping wallets for sandboxes like Project Ensemble.
APAC’s edge lies in nuance: a mosaic of markets demanding tailored strategies. “You can’t treat Asia as a monolith like North America or Europe,” Scott warned, drawing from his Wall Street days.
ETF launches, regulatory pilots and sandboxes abound, but Scott spots scalability in those emphasising collateral utility and cross-border flows. Initiatives like tokenised treasuries or yield-bearing crypto natives could catalyse mainstream institutional inflows, barbelling high-grade RWAs with innovative DeFi edges.
Unlocking liquidity: Multi-chain strategies and collateral breakthroughs
Liquidity and interoperability, however, remain stubborn bottlenecks. Tokenised markets suffer shallow pools and siloed chains, yielding “cyclical spurts” of interest rather than steady participation.
Multi-chain access is therefore pivotal, and Marketnode’s Gateway platform now spans Solana, Stellar and XRP Ledger.
“Each chain serves different users,” Scott said, advocating chain-agnosticism led by issuers. This democratises entry, ports liquidity and combats fragmentation. Yet, true scale hinges on interoperability at institutional grade: seamless bridging without ‘dirty’ workarounds. Until then, banks outsource to specialists like Marketnode, segregating risks via charters.
According to Scott, TradFi must embrace DeFi’s composability (on-chain voting for shareholder actions, wallet-dropped dividends) while DeFi adopts risk management’s precision.
The 2008 crisis haunted him: opaque Lehman exposures bred chaos. Tokenisation’s transparency, real-time positions sans sub-account labyrinths, on the other hand, helps fortify resilience.
“Imagine knowing your exposure every second,” he said. Vice versa, crypto’s creativity infuses TradFi: tokenized equities, not just claims but native shares, could fast-track corporate raises, blending dividends, governance and 24/7 trading.
TradFi’s guardrails meet DeFi’s ingenuity
Beyond equities, intangibles beckon. Art and history (think Stradivarius violins and Picasso) capture latent value, fractionalising cultural heirlooms for global access.
The addressable market? “Everything,” Scott said, from trillions in assets to uncharted intangibles. Tokenisation isn’t additive, it expands the pie, rendering bearer bonds obsolete in a singular on-chain registry.
Marketnode’s ambitions mirror this vision: a ‘barbell’ of pristine RWAs and crypto-native yields, educating partners from HSBC to family offices. Expansion targets Europe post-Asia mastery, sidestepping U.S. regulatory thickets. Regulators earn Scott’s praise for collaborative evolution—Asia’s edge in iterative refinement.
What signals the chasm crossing? Not size alone, but parity. When tokenized assets are custodied universally and wield collateral power akin to TradFi peers. “I own Marketnode shares on SGX or Solana. Does it matter where?” Scott posited. That indifference marks maturity.
Tokenisation’s revolution isn’t headline-grabbing fanfare; it’s the grind of best practices, from data hygiene to collateral acceptance. In APAC’s fertile soil, firms like Marketnode till toward a financial future unbound by legacy. The US$30 billion today? A foothold. The trillions tomorrow? Inevitable, if we prioritise substance over spectacle.
As Scott put it, “We know the end state. Our job is navigating there, discipline by discipline.”
