Major financial institutions believe private debt will be the first asset to be tokenised and routinely traded digitally, according to new global research conducted by industry association Global Digital Finance.
A study of finance firms in the US, Asia, Europe (including the UK) and the Middle East responsible for more than $221.75bn assets under management found 70% identified private debt as the first asset to be tokenised and routinely traded ahead of 62% saying Money Market funds.
However, the research by GDF found the firms questioned would be most interested in tokenised infrastructure funds when asked to choose among alternative assets.
Almost all (92%) questioned said their firm had started to see benefits from tokenisation and digital trading while 79% have experienced cost savings from a switch to digital assets.
Some 81% of respondents believe the biggest benefit from tokenistion and digital trading is increased transparency, with 75% pointing to increased liquidity of illiquid assets and 71% faster and more efficient trading. Around half (46%) said increased liquidity in general is the biggest benefit while 23% cited lower compliance costs.
A total of 59% of respondents pointed to in-house or third-party custody costs being the key cost saving from their firm’s switch to digital assets, with 53% pointing to reduced regulatory compliance and reporting costs and collateral management. Around 40% said switching to digital assets cuts research and development costs in areas such as product development while 25% believe switching to digital assets reduces distribution costs.
