Tokenisation underlies a fundamental shift in the architecture of financial markets as we know today. Enabled by distributed ledger technology, smart contracts and adjacent advances in cryptography, it changes the way assets are issued, traded, custodied and transactions settled. Furthermore, tokenisation changes the way users interact with money and finance, particularly in emerging market and developing economies (EMDEs).
The long-term realisable value distributed ledger technology is evolving towards a combination of monetary and payment frameworks and instruments along with a focus on real-world assets, meaning financial and non-financial instruments whose value is anchored in legal claims on off-chain rights.
Much of the public debate on tokenisation has been shaped by priorities in advanced markets, from modernising wholesale market infrastructure to improving efficiency of back-office operations and enabling new forms of institutional liquidity. While these themes are important, they are not aligned with constraints and opportunities of RWA tokenisation in EMDEs.
In EMDEs, aspects such as the development and depth of domestic capital markets, large informal sectors and higher costs of cross-border movement of capital and remittances are more relevant. Market development in EMDEs also differs: digital financial services have already scaled rapidly via mobile money, agent networks and fintech-led innovations in many of these markets and wallet-based approaches for younger demographics already outnumber traditional financial accounts.
Against this backdrop, our report:
- identifies promising use cases for RWA tokenisation in EMDEs, including which asset classes are being tokenised
- investigates legal, regulatory, policy and infrastructure pathways that can enable responsible scaling, including the role of public-sector initiatives (such as policy strategies, regulatory responses and tokenised money projects)
- draws lessons from first movers and representative jurisdictions, contributing to the growing evidence base on how financial innovation can be harnessed for inclusive growth and deepening of capital markets
Risks, opportunities and challenges
The value proposition of tokenisation derives from its potential to reduce the administrative costs of small-denomination offerings, automate compliance and servicing, improve post-trade processes, support more continuous secondary-market activity and enable composability across platforms.
Many of the risks present in products and activities in conventional markets persist in tokenised form, but often manifest differently, the report shows. For instance, fragmentation across competing, non-interoperable DLT networks and the prevalence of custom-built smart-contract standards risk fragmenting liquidity. Growing interlinkages between tokenised instruments and the broader cryptoasset ecosystem also create new transmission channels for financial stability shocks. Existing supervisory tools may not capture these risks.
While fractional ownership models can broaden retail access, many EMDEs face low financial literacy and limited investor protection safeguards. More complex tokenised products, combined with inadequate disclosure standards and weak governance, can heighten consumer exposure to fraud, misselling and operational failure.
Tokenisation can reconfigure instead of eliminating components of the asset lifecycle, consolidating activities such as clearing and custody into new formats. This shifts supervisory focus towards outsourcing arrangements and the identification of critical third parties.
Policy, regulatory and infrastructure enablers
Regulatory approaches relating to RWAs can be grouped into 3 broad categories: the extension of existing securities frameworks, bespoke virtual or cryptoasset service providers regimes and anti-money laundering registration frameworks focused on intermediaries and transactional flows. Applied in isolation, none of these approaches captures the full lifecycle of a tokenised asset.
The most effective regulatory responses combine experimentation with institutional coordination. Sandbox-based approaches remain the preferred mechanism for testing tokenisation use cases.
As in other phases of technological change in finance, the evolution from tokenised finance will be shaped as much by policy, legal, regulatory and institutional design and market structures as by technology and market dynamics.
Our research points to a gap between market readiness and regulatory preparedness in emerging economies. Institutions are prioritising tokenisation strategies, while regulators are still assessing how to engage. Their response will define whether tokenisation contributes to deeper, more inclusive capital markets, or creates new risks that go unsupervised.
Tokenisation does not simply replicate existing market risks in digital form – it changes them. Some are reduced, others amplified, and new ones emerge. Frameworks will need to evolve, and, in some cases, they may enable new market structures altogether. Experimentation and institutional coordination have been proven to be the foundation of an effective response.
Explore the report
Download your free copy of Tokenised Assets: Pathways for EMDEs to read the full findings, regulatory toolkit and recommendations.
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