Drivers, opportunities and challenges with asset management tokenization.

Last week, I hosted my first tokenization event in partnership with CMS, dedicated to exploring the key drivers, challenges and opportunities in asset management tokenization.

A group of esteemed practitioners from asset managers (e.g. State Street, Vanguard, Baillie Gifford) and tokenization infrastructure providers (e.g. Stellar, Ownera, Archax) joined to discuss what’s really happening as asset management tokenization has seen onchain AUM explode from $100M to $8.4B in 2 years.

Here are some of the top questions and takeaways from that discussion 👇

Why Tokenize Now?

1. Operational efficiencies

Despite upfront costs, firms see real potential for cost and time savings across fund administration, reconciliation, and settlement in the long term.

2. New markets, clients, and geographies

There are ~70 million monthly active crypto wallets, with ~90% of users aged 18–40. That’s where the next generation of investors already are.

3. Everyone wants smart assets

Idle balance sheet holdings can become programmable, yield-bearing, and collateral-eligible - unlocking utility that doesn’t exist in the legacy world.

Use Cases Gaining Real Traction

1. Collateral management

Today’s collateral processes are siloed, fragmented, and slow. Tokenized MMFs enable just-in-time liquidity, intraday repo, and real-time margin.

• Example: Owners and JPMorgan’s live intraday repo use case.

• Example: Lloyds Bank and Aberdeen Investments piloted tokenized MMFs for FX margin, avoiding costly fiat movements.

  
  

2. Asset utility and the power of composability

High-net-worth investors want to use what they already own. Tokenized fund holdings can be pledged to gain leverage, avoiding the delays of private banking processes.

3. Tokenized regulated natively onchain funds

Tokenized MMFs issued and held directly onchain would be the ideal form of short term investment and collateral.

• Example: Franklin Templeton’s natively onchain tokenized MMF (BENJI) on Stellar originally established for operational efficiency and is now seeing $500M+ AUM.

Challenges Still to Overcome

• Books and records problem remains the core legal hurdle. Many jurisdictions still require an off-chain legal register even if the token is the source of truth on chain.

  
  

• Cost and duplication: firms must run two sets of books for a transition period, similar to early online banking. This entails extra costs.

  
  

• Operational lift: tokenized systems demand 24/7 infrastructure and operations processes.

  
  

• Regulatory confidence: both investors and regulators still want the comfort of parallel records until the legal frameworks fully evolve.

The Takeaway

Despite these frictions, the evidence for tokenization is building fast.

The combination of efficiency gains, new client segments, and regulatory traction is pushing the asset management industry toward inevitable on-chain transformation.

This roundtable marks the beginning of a deeper institutional conversation - one that will shape how traditional and digital finance converge over the next decade.

I will be hosting more events on asset management, banking and payments. If you are interested in co-hosting or sponsoring, get in touch.