Chapter 4 : ETP structure
infrastructure (‘ other tokenisable assets ’) and unlisted equity , will make up approximately 45 % of an expected $ 24 trillion market for tokenised assets by 2027 .
Role of ETF wrapper
And , beyond illiquid assets , the speed and efficiency of trading on the blockchain , removing time consuming reconciliation processes , could create applications for tokenisation in already liquid listed shares or units .
But the important thing to note about these changes is that they will ultimately be made in the service of generating outcomes that investors have been seeking ( and providers seeking to deliver to them ) all along ; namely improved returns , investment choice and efficiency of service , coupled with lower costs .
So even the most potentially disruptive elements of crypto and tokenisation revolutions will , in some ways , end up combining and making accommodations with legacy structures and methods .
Between the traditional worlds of asset management and its supplementary financial services like custody banking and fund administration on one side , and the new world of fintech facilitated liquidity and tokenisation on the other , there will be significant disruption and change .
But to the end investor , especially the individual consumer , much of this will not be visible and what they will notice will be the speed and ease with which they
“ can move their money in and out of an increasingly diversified range of asset classes .
Retail investors will most likely access these new token-shares through a combination of the way in which they currently trade listed , liquid shares and the funds containing them ( increasingly online and app-based sharedealing platforms ) and the way they trade existing blockchain-based investments like cryptocurrencies ( i . e . digital wallets ).
In terms of the interface used by the end consumer , these will likely be the same , and easy access , intuitive single platforms for digital and traditional assets ( as well as bank accounts containing cash ) will become the norm .
The architecture that underpins this new , easier system of transactions will where the major changes take place – a system of
ETFs are at the forefront of existing use cases for blockchain in fund management
accounting and traditional ledgers managed by banks on behalf of investment institutions and platforms replaced by a system of blockchain-based ‘ smart contracts ’ governing the issuance and transfer of tokenised assets .
The role of intermediaries such as banks in this environment will no longer be the manual updating and exchange of large volumes of data on behalf of participating institutions , but the issuance of the contracts that tokenise the underlying asset and their management through coding and technological architecture .
Banks will play a significant role in the issuance and servicing of digital assets in the future . In particular , ETFs as well as mutual funds stand to benefit by being tokenise creating a new way for new participants to issue , hold , trade and service assets . The benefits of blockchain technology will allow for immediate settlement as well as seamless flow between asset classes via ETFs and mutual funds . Banks will be the leaders in the space because tokenisation will be a service provided by the banks who service these assets . The nature of the interplay of
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