How blockchain is quietly revolutionizing capital markets

For years, blockchain technology has been a solution in search of a problem, often overshadowed by the volatility of its most famous creation, cryptocurrency. However, behind the scenes, the foundational technology is being primed for a revolution in the plumbing of capital markets through asset tokenization.

Financial institutions across the UK and the US are moving past exploratory whitepapers and are now actively building the infrastructure to transform real-world assets—from private equity and real estate to carbon credits and fine art—into programmable digital tokens on a blockchain. This isn’t about creating the next speculative digital currency; it’s about leveraging distributed ledger technology (DLT) to create more efficient, liquid, and transparent markets.

The promise is compelling: unlock trillions of dollars currently tied up in illiquid assets. According to a recent report by the Boston Consulting Group, the tokenized asset market could swell to over $16 trillion by 2030.² For the traditional finance sector, this represents not a threat, but a monumental opportunity to lead the next evolution of market infrastructure.

Unlocking Liquidity and Fractional Ownership

The primary driver of institutional interest is the ability of tokenization to solve the age-old problem of illiquidity. Assets like commercial real estate or private company shares are notoriously difficult and expensive to trade, often requiring months of paperwork and numerous intermediaries.

By representing ownership of these assets as a digital token, the process changes dramatically.

• Case in Point: Major financial players like J.P. Morgan have already demonstrated this with their Onyx Digital Assets platform, which has facilitated the tokenization of money market fund shares for use as collateral in repo trades. This allows for instantaneous, 24/7 settlement, a feat impossible in traditional markets bound by standard operating hours.

Furthermore, tokenization allows for fractional ownership, breaking down high-value assets into smaller, more accessible units. This could democratize investment opportunities, allowing a broader base of investors to gain exposure to asset classes previously reserved for institutional or ultra-high-net-worth individuals. Imagine being able to purchase a £1,000 stake in a landmark London office building or a $500 share of a pre-IPO tech unicorn.

Enhancing Transparency and Efficiency

Beyond liquidity, blockchain’s inherent features offer significant operational advantages. A distributed ledger provides an immutable and transparent record of ownership and transactions. Every transfer is recorded on-chain, creating a single source of truth that is visible to all permitted participants.

This slashes the need for the complex and costly reconciliation processes that define so much of post-trade finance. By embedding compliance rules and business logic directly into the token via smart contracts, many manual checks can be automated.

• Real-World Application: In the UK, several fintech firms are working on platforms to tokenize corporate bonds. The smart contracts governing these tokens can automatically manage coupon payments and maturity, drastically reducing the administrative overhead for both the issuer and the investors. This programmability ensures that regulatory requirements, such as restricting sales to accredited investors only, are automatically enforced at the asset level.

The Road Ahead: Overcoming Hurdles

While the potential is enormous, the path to mass adoption is not without challenges. Regulatory uncertainty remains a key concern, as authorities in both the US and UK work to fit this new technology into existing legal frameworks. Establishing clear rules around custody, issuance, and investor protection is critical for building market confidence.

Furthermore, the industry must coalesce around interoperability standards to prevent the creation of siloed digital islands. For tokenization to reach its full potential, assets tokenized on one platform must be seamlessly transferable and tradable on another.

However, the direction of travel is clear. The institutional embrace of asset tokenization is well underway. For financial and fintech leaders, the question is no longer if blockchain will reshape capital markets, but how they will position their organizations to build and benefit from this new, more efficient, and democratized financial future.