Major financial institutions believe private debt will be the first asset to be tokenised and routinely traded digitally, according to research.
The study by Global Digital Finance (GDF), the global members association and platform for open innovation in digital assets in financial services, involved finance firms across the US, Asia, Europe and the Middle East.
According to the findings, 70% of respondents selected private debt as the asset class most likely to be tokenised and routinely traded, surpassing the 62% who chose money market funds.
Private markets turn to tokenisation
Despite this, when it comes to alternative assets, the firms showed the most interest in tokenised infrastructure funds.
Lawrence Wintermeyer, executive co-chair at GDF, stated: “Private debt is seen as the asset class most likely to be the first tokenised and routinely traded, but there are also expectations that money market funds and mutual funds and ETFs will not be far behind.” He emphasised that while private debt leads the way, infrastructure funds are particularly attractive for tokenisation among alternative assets.
The benefits of tokenisation are already being realised, with 92% of those questioned noting their firms had started to see advantages from digital trading. Furthermore, 79% reported experiencing cost savings by switching to digital assets. Increased transparency was identified as the biggest benefit by 81% of respondents, followed by increased liquidity of illiquid assets (75%) and faster, more efficient trading (71%).
Could tokenised funds transform the UK fund landscape?
Cost savings were a significant highlight, with 59% of respondents identifying in-house or third-party custody costs as a key area of savings. Additionally, 53% pointed to reduced regulatory compliance, reporting costs, and collateral management. Around 40% noted that digital assets cut research and development costs, while 25% highlighted reduced distribution costs.
Wintermeyer added: “Almost all firms agree that there are major benefits and cost savings from adopting tokenisation and many are already experiencing them.”
