Tokenized Funds Go Mainstream: Asia and the U.S. Lead the Adoption Competition

Author: Calastone, Global Custodian

*Compiler: *Block unicorn

The mainstreaming of tokenized assets is rapidly evolving, and asset managers around the globe are increasingly optimistic about implementation timelines and internal adoption, according to a new survey conducted by Calastone, the world’s largest fund network, in partnership with Global Custodian. The survey shows that Asian and U.S. companies are leading the way in launching commercially viable tokenized products.

Asian companies optimistic about the near-term launch of tokenized funds

The survey data clearly shows that the inclusion of tokenized funds in the product range is an important agenda for asset managers around the world in the context of increased competition. The vast majority of participants stressed that they expect this to become a commercial reality within three years or less.

Analyzing the data further, we find that overall, US-based and Asia-based companies are the most optimistic about launching tokenized products to the market in a short period of time, with 67% and 61% of survey participants, respectively, saying it is possible within a year. In the case of the Asian region, nearly 86% of companies said they were on track to do so within three years.

Asia & U.S. Leading Fund Tokenization

When asked about their current attitudes towards tokenization and the impact it could have on day-to-day activities, only a minority of respondents (about 10%) said they currently don’t see the role of this technology in their business. Perhaps even more impressive, more than 50% of respondents claimed to be exploring applications in specific areas. The U.S. and Asia are once again leading the way at the regional level when it comes to actually implementing tangible tokenized projects. In both geographies, nearly 40% of companies say they are actively pursuing these programs in their business.

While many players have multiple products across the asset class, the data seems to indicate that while tokenized projects are being used in portfolios of investment opportunities, companies working in the fixed income and private asset space are the most advanced in driving implementation.

“Our clients in Asia are not only looking forward to the rise of tokenized funds, but they are actively paving the way for it. The survey shows that asset managers in the region are eager to capitalise on the benefits of tokenisation and are preparing for implementation at an impressive pace, already making scalable implementations across product development, distribution and trading,” said Justin Christopher, Head of Asia at Calastone. "The active efforts of governments and the private sector in the region to form collaborative initiatives, such as Singapore’s Project Guardian project, have played a key role in supporting Asia’s leading position on the global stage. ”

Personalized investment experience for UHNW in Asia

Overall, the survey confirms that there is an emerging consensus on many of the perceived benefits of tokenization among customers, from reducing costs and enhancing liquidity to acquiring new asset classes and creating a more personalized investment experience. When asked to choose what participants personally considered to be the first two most important benefits, the opinions were largely balanced, with about a quarter of the overall responses pointing to each of the four options.

While respondents in Asia do see cost reduction as the biggest benefit of tokenisation, these participants are more likely to say that developing more customized investment solutions is a key advantage compared to their regional counterparts, particularly to better serve ultra-high-net-worth (UHNW) clients. About 25% of companies in the region say this is an important consideration, compared to 23% globally.

External factors are the biggest barriers to digital asset adoption

Optimistically, the majority (67%) of asset managers say they expect to be able to leverage existing technology and expertise to manage the launch of tokenized investment vehicles. On a practical level, this indicates that the company’s confidence in executing its tokenization strategy is rising in the coming years. This may be due in part to the growing in-house knowledge and knowledge of this area, as well as the expanding capabilities of technology partners and administrative service providers in this area.

The most common obstacle to institutional participation in digital assets is the lack of a central bank digital currency (CBDC), which is cited by more than 80% of respondents as the industry’s top or second most prominent obstacle, followed by regulatory uncertainty. This seems to support the idea that companies are increasingly able to manage or overcome challenges, either directly or in collaboration with partners.

Looking ahead, Christopher explains: "Institutional adoption of digital asset consolidation in Asia is undoubtedly on the rise, and companies are growing in their ability to manage and configure this transformation. However, the process is not without its challenges. To unlock the full potential of the digital asset ecosystem, we continue to advocate for broader collaboration across the industry. ”

Survey Methodology

The data cited in this press release is based on findings from a global survey conducted by Calastone in close collaboration with Global Custodian in Q3 2023 to assess the fund industry’s adoption and attitudes towards asset tokenization.

Of the 141 participants in the survey, the majority (80%) were asset managers, with the remainder being other industry stakeholders, including fund administrators, custodians, and management companies (Mancos). To ensure a broad range of regional perspectives are captured, respondents came from the US (16%), Asia (35%), and the UK and Europe (49%).

The data was collected through online surveys, including multiple choice and structuring response questions, and the numbers cited in the press release were derived from the analysis of these data.

Source: Block unicorn