The market for tokenised securities is growing rapidly, with shares increasingly being represented digitally on a blockchain rather than being booked into a securities deposit. „Many investors are betting on the tokenisation of real assets because it offers them significant efficiency gains – and clear legal structures exist for it,“ says Daniel Knoblach, board member of Super Global Services SA.
The total volume of tokenised real-world assets, known as RWAs, has quadrupled in the past twelve months to more than 26 billion US dollars. The market capitalisation of tokenised shares alone has now surpassed the one billion US dollar mark. At the same time, the segment is still vanishingly small compared to the traditional stock market. „This suggests high growth in the trading of tokenised securities in the coming years, as more and more issuers and investors recognise the advantages of settlement via the blockchain,“ says Knoblach.
Free and non-binding
Tokenising securities on a blockchain makes distribution more efficient and enhances their tradability. Transactions can be processed and executed within seconds, without the need for a broker. This also enables immediate sales between investors, or peer-to-peer trading, irrespective of stock exchange opening hours. Furthermore, it is possible to acquire just a fraction of a share.
Alongside the trading benefits, the characteristics of an investment in conventional securities remain: the performance mirrors that of the underlying security almost one-to-one. The assets are also treated accordingly from a regulatory perspective. „Legally, RWAs represented on the blockchain, if structured appropriately, continue to be securities,“ says Knoblach.
When processing via service providers in Luxembourg, the established regulatory framework of the financial centre in the Grand Duchy also applies: for products set up as compartments, the clear guidelines of the Luxembourg Securitisation Act apply.
Not only is the trend towards tokenising shares as tokenised securities likely to strengthen in the coming months. Because blockchain also simplifies transactions involving illiquid assets such as real estate, increased demand is also to be expected here: „Tokenisation is now a reality – and in our industry, we are only at the beginning with this,“ says Knoblach.
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