Tokenisation: Capturing Digital Yield

Since its inception in 2011, Fasanara Capital has pursued a clear mission: bridging institutional capital with segments of the economy frequently overlooked by traditional financial systems. At the core of this mission lies a commitment to financial inclusion, promoting sustainability, and innovation. Focusing on small- and medium-sized enterprises (SMEs) and underserved segments, Fasanara empowers economic agents that underpin global productivity and growth.

Leveraging advanced technology and global fintech partnerships, Fasanara efficiently allocates capital to areas of greatest impact, bridging traditional finance and the evolving digital economy. Over the past decade, Fasanara has established itself as one of the leading firms in sourcing and managing real-world assets (RWAs) such as loans and receivables, utilising our extensive fintech network and advanced technological capabilities.

The financial world has undergone significant shifts in recent years, reflecting both challenges and opportunities within traditional systems. With banks retreating from mid-market and SME lending, alternative credit solutions have emerged, enabling access to capital for underserved sectors. This trend aligns with rising demand for low-volatility, short-duration investments and digital yield strategies, where stable, high-liquidity assets provide reliable, uncorrelated returns for investors. Demand for alternative investments, including private credit—defined as loans to companies from non-banking institutions—has surged. The asset class is expected to grow to $2.6 trillion by 2029 from $1.5 trillion at the end of 2023, according to Preqin data:

Source: Reuters/Preqin

Pioneering the Digital Economy Through Tokenisation

Evolving macroeconomic dynamics, combined with the proliferation of blockchain technology and digital asset markets, have created new avenues for yield generation, paving the way for Fasanara’s tokenisation-driven initiatives. Both new and traditional investors are looking beyond conventional asset classes and legacy financial systems, exploring opportunities in tokenised assets and decentralised finance (DeFi). RWAs are emerging as a pivotal bridge between traditional finance and its on-chain decentralised counterpart.

This convergence creates new value by digitising ownership rights to tangible and intangible assets, enabling greater liquidity, transparency, and accessibility through blockchain.

Fasanara believes the market opportunity for tokenisation is sizable, with the potential to encompass virtually any financial asset. Northern Trust and HSBC estimate that 5-10% of all assets will be digital by 2030, while BCG and ADDXestimate the market for tokenised assets to reach $16 trillion by 2030:

Source: Tokenised Asset Coalition’s 2024 State of Tokenisation Report. Sep 2024

Blockchain propels financial market infrastructure into the 21st century by streamlining and automating manual and time-consuming processes. The need for shortened settlement cycles – which can improve liquidity, enhance market efficiency and lower systemic risk – and the demand for 24/7 market operations requires a new infrastructural backbone. For example, using blockchain for collateral management can free up over $100 billion in capital annually.

The combination of reduced settlement risk, enhanced capital efficiency, and improved operational workflows are key drivers of tokenisation's growing appeal among leading financial institutions. This shift not only modernises asset management but also accelerates the adoption of decentralised financial tools, creating an interconnected financial ecosystem.

At Fasanara, our tokenisation strategy reflects an overarching vision of bridging gaps in global financial inclusion. Tokenisation serves as a critical enabler, providing liquidity and inclusivity while aligning capital flows with real economic needs. The growing success of stablecoins underscores this universal demand for digital assets that combine stability with accessibility, paving the way for inclusivity and broader asset digitisation.

Stablecoins: The Original RWAs

Stablecoins have emerged as a key pillar of the cryptocurrency ecosystem, demonstrating strong product-market fit by tokenising one of the most fundamental RWA: the U.S. dollar. By placing the dollar on blockchain rails, stablecoins have unlocked the ability to transact globally, 24/7, with unparalleled efficiency. This innovation has proven to be a "killer app," reaching a market capitalisation of over $200 billion, facilitating trillions of dollars in transaction volume, and connecting millions of wallets worldwide.

Source: CCData, DeFi Lama, Jan 2025

Leading companies increasingly recognise the benefits of stablecoins and tokenisation, particularly for faster and more cost-effective transactions. A recent Coinbase report highlights growing interest among Fortune 500 companies in these technologies to streamline payments and enhance efficiencies:

Source: Coinbase Fortune 500 Moving On-Chain, June 2024

The combination of liquidity, accessibility, and stability offered by stablecoins may even help fortify the U.S. dollar’s global position as a reserve currency, allowing the U.S. to borrow more cheaply and sustain large trade deficits. According to a16z’s State of Crypto report, stablecoins—despite being only a decade old—have become a top 20 holder of U.S. debt, surpassing nations like Germany:

Source: a16z , October 2024

Stablecoins' meteoric rise has drawn attention from major fintech players. Stripe's recent $1 billion acquisition of Bridge underscores their belief in stablecoins as a revolutionary force in global payments, likening them to "superconductors" for financial services. This move comes just half a year after Stripe reintegrated crypto checkout with USDC support.

Additionally, Revolut and Robinhood are reportedly reviewing entry into the stablecoin arena. Meanwhile, Visa has announced plans to facilitate stablecoin issuance for banks, with BBVA already on board.

Source: FXC Intelligence, November 2024

What's driving this surge of fintech interest in stablecoins, and why now? At their core, stablecoins can offer a more efficient mechanism for global money transfers. They serve as a new foundational layer for payments, enabling secure, round-the-clock transactions year-round.

Aggregating trillions of dollars in transaction volume annually, stablecoins illustrate the transformative potential of digitising traditional financial assets via blockchain technology. While no other traditional capital market product has achieved this level of adoption, the proven demand for tokenised dollars is now translating into a strong global appetite for their yield-bearing, liquid, cash equivalents.

Tokenised Treasuries: Bridging Stability and Yield

Stablecoins are widely regarded as crypto’s most successful use case, providing investors a means to exit volatile crypto assets while remaining within the ecosystem. They also offer non-U.S. investors a simple way to gain dollar exposure. However, stablecoins face limitations due to the absence of yield and investor protection frameworks.

At Fasanara Capital, we recognise that the successful tokenisation of RWAs hinges on robust legal frameworks to ensure enforceability of tokenised rights and build trust among institutional investors—a critical factor for long-term adoption. Tokenised treasuries build on the stablecoin framework, while introducing new dimensions of utility. Unlike stablecoins, which focus mainly on transactions, tokenised treasuries, blockchain assets that represent direct ownership of yield-bearing government bonds, provide secure predictable yields while also maintaining the liquidity and accessibility of blockchain assets.

In TradFi, treasuries are widely used as collateral due to their safety, liquidity, low credit risk, and stability, enabling significant leverage and liquidity across global markets. The World Economic Forum expects tokenisation to unlock collateral mobility on a scale previously unattainable, citing the $255 trillion in marketable securities that are in demand for use as collateral as a transformative impact on both new liquidity and risk reduction.

Tokenised treasuries bridge the trust and stability of TradFi with the innovation and programmability of DeFi, enabling the next potential high-growth RWA market. These instruments allow crypto-native on-chain investors to capture additional yield in a stable, secure asset without moving funds out of a crypto environment. According to a recent ChainLink report, the market value of funds backed by tokenised U.S. treasuries has grown over 180% this year alone. This driven by a combination of institutional investors looking for entry onto blockchain rails, as well as crypto-native DeFi protocols, DAO treasuries and stablecoin issuers seeking on chain stability, liquidity and yield. The total market cap of tokenised treasuries has now risen to over $4bn:

Source: rwa.xyz, January 2025

As U.S. government debt, treasuries avoid the volatility of crypto and the transparency and counterparty risks associated with stablecoins. As shown via a recent Depository Trust & Clearing Corporation (DTCC) pilot, tokenised treasuries have the potential reduce risk, expand liquidity and offer enhanced returns by earning yield on the collateral.

At Fasanara Capital, we are at the forefront of bridging traditional finance and DeFi, leveraging our expertise to unlock new opportunities in the digital asset space. Our approach combines institutional-grade investments with innovative blockchain technologies, allowing us to tap into the growing potential of RWAs.

We have significantly expanded our presence in the DeFi ecosystem, with platforms like Morpho, Clearpool and Fireblocks, enabling secure access to hundreds of DeFi liquidity pools, staking, and trading applications.

By leveraging its expertise in both TradFi and DeFi, Fasanara Capital is well-positioned to capitalise on this trend, offering institutional investors a gateway to blockchain-based assets while providing crypto-native entities like DeFi protocols and DAO treasuries access to on-chain stability, liquidity, and yield.

Expanding Markets, Revenue, and Capital Efficiency

Tokenised treasuries present a transformative opportunity for both crypto and traditional finance. Backed by U.S. government debt, these instruments provide unmatched stability, avoiding the extreme volatility of crypto assets and the opaque yield structures of certain stablecoin. By tokenising treasury securities, investors gain access to stable, low-volatility, yield-generating collateral that seamlessly integrates into DeFi ecosystems.

Tokenised treasuries reduce risk and optimise returns by earning yield on the collateral and the CFTC’s Global Markets Advisory Committee recently advanced recommendations on tokenised collateral for margin calls. Using tokenised securities as collateral unlocks trillions in previously inaccessible capital, with less than 0.25% of total global assets are represented on blockchain infrastructure.

As the market grows, corporate treasurers and institutions gain access to instant settlement, efficient liquidity management, and optimised collateral use. U.S. government debt on blockchain creates stable, low-volatility yield-generating collateral that can be seamlessly integrated into DeFi ecosystems. Tokenised treasuries provide direct, onchain access to treasury yields, while also eliminating some of the key limitations inherent within TradFi’s infrastructure:

• High entry barriers • Inefficient price discovery • Delayed settlement cycles • Restricted fractional ownership • Geographic limitations • Siloed financial systems • Manual, error-prone workflows

Tokenised treasuries address these challenges directly, providing a modern alternative with distinct advantage. Lenders can evaluate creditworthiness in real-time, reducing default risks and accelerating borrowers' access to global liquidity. Emerging business models and markets provide expanded opportunities for generating alpha and managing risk. Short-term liquidity transactions, including tokenised repos and securities lending, have the potential to benefit significantly from enhanced capital efficiency in a high-interest-rate environment."

Where Next? Regulation, Rates and Returns

As countries develop comprehensive regulatory frameworks for digital assets, global crypto adoption continues to grow. With the emergence of ETFs and a supportive incoming administration, the door to broader crypto adoption has opened. A recent report by Franklin Templeton notes the pivotal role the Bitcoin Exchange Trade Funds (ETFs) have played in the pathway toward RWA tokenisation:

ETFs enable the efficient transfer of securities or assets, allowing non-traditional assets to integrate seamlessly into portfolios alongside traditional offerings. This can be seen as a steppingstone toward the even greater portability that tokenisation would enable. The ETFs, coupled with a pro-crypto U.S. administration have seen a seismic shift in the investment landscape with an increasing number of the barriers to widescale adoption starting to diminish:

The recent regulatory changes, including the EU Markets in Crypto-Assets (MiCA) Regulation legislation on stablecoins, are expected to significantly benefit both stablecoins and the RWA space. Issued in June, the guidelines established technical standards for stablecoin issuers under the MiCA framework, categorising stablecoins used for payments as e-money tokens (EMTs) and commodity-backed tokens as asset-referenced tokens (ARTs).

The European Banking Authority (EBA) stablecoin guidelines seek to better protect investors in cases where the issuer encounters financial challenges or the stablecoin collapses, as happened with Terra’s UST around the time of the FTX scandal. They also extend to curb money laundering risks, fraud, and other compliance risks.

These frameworks aim to establish safety nets, bridges, rules, and an operating environment to promote the sector’s growth, while ensuring consumer and user protection.

As Bitwise Investments showed in their annual survey of hundreds of financial advisors, the number one reason holding back investment in crypto every year has been “regulatory concerns” by a wide margin:

Source: Bitwise Benchmark Survey, January 2024

Clearer regulatory frameworks are expected to reduce perceived risks, enabling deeper integration of RWAs with DeFi and TradFi while addressing DeFi’s core challenges: price stability and scalability.

After years of developing infrastructure, coupled with favourable regulatory conditions, the blockchain technology is now poised to effectively support the scaling of tokenisation. As regulatory and technological frameworks mature, they are expected to accelerate the adoption of tokenised assets, creating a more integrated and scalable financial market.

Utility vs Yield

Tokenised treasuries have seen significant growth and adoption in on-chain capital markets, but their appeal may wane as traditional market interest rates fall and DeFi yields rise with renewed crypto market optimism.

As we enter 2025, global central banks are all on a rate cutting path:

Sources: Metlife Global 2025 Outlook, October 2024

The anticipated decline in risk-free rates will push crypto-native investors to seek alternative, secure, and steady sources of cash flow. To maintain their relevance and continue growing, RWA protocols need to evolve and develop strategies that address this imminent market shift. This trend is likely to benefit a broader range of tokenised RWA offerings, which can provide attractive yields, stable cashflows, while minimising volatility.

Tokenised offerings can address the looming yield challenge through two primary approaches: (1) tokenising higher-yielding TradFi assets and (2) developing enhanced offering utility, beyond headline yield.

Recently, a range of assets across the risk and liquidity spectrum—such as private credit, equity, and real estate—have been tokenised, driving innovation beyond tokenised cash equivalent. The growth potential for private credit is a case in point, with Prequin forecasting a market size of nearly $3 trillion by 2029, from the current $1.7 trillion. In contrast, excluding equity home loans, there is only about $500 million of tokenised private credit:

Source: S&P Tokenised Private Credit: A New Digital Frontier for Real World Assets, October 2024

Private market initiatives face significant barriers to mass adoption unless managed by asset managers with extensive expertise in credit underwriting and originator due diligence, both of which are critical to ensuring risk-adjusted stable returns and minimising credit default risks. The spate of defaults in 2022 underscored the risks of unsecured lending on digitally native platforms, emphasising that the quality of the credit remains critical, even when tokenised.

Managing risks related to collateral valuation and limited liquidity requires thorough assessment of the collateral, continuous monitoring of its value, ensuring the legal enforceability of contracts, and the ability to monetise the collateral in case of default. Another avenue for product innovation lies in leveraging tokenised products to unlock unique efficiencies absent in traditional markets. Examples include 24/7 liquidity, cross-collateralisation for trading margins, peer-to-peer transfers, and enhanced payment utilities.

The utility provided by collateral is poised to become the “killer app” for tokenised treasuries. As interest rates decline and investors assume greater risk, demand for both credit and leverage is surging. Tokenised treasuries offer superior collateral through their yield-bearing properties and inherent investor protections, enabling them to thrive even in a low-interest-rate environment.

Conclusion: Market Growth and Future Potential

The market for tokenised assets, including treasuries, is poised for significant expansion. In less than a decade, asset tokenisation is expected to exceed $16 trillion and will represent 10% of global GDP by 2030, according to Boston Consulting Group. This growth is driven by technological advancements, regulatory clarity, and increasing adoption among institutional investors.

Tokenised assets are becoming integral to portfolios managed by asset managers, hedge funds, and pension funds, enhancing liquidity, optimising collateral use, and enabling diversification. Products like tokenised treasuries offer a secure and stable yield-generating option while integrating seamlessly into existing financial workflows. In addition, tokenised treasuries serve as a reliable, yield-bearing alternative to volatile crypto collateral, bridging the gap between TradFi and DeFi. This expanding role fosters innovation and unlocks efficiencies within global financial ecosystems.

The platforms and products that will shape the future of tokenised assets will combine innovation with operational excellence. Products managed by experienced asset managers with proven expertise in credit underwriting and risk management will be critical to building trust and ensuring long-term viability. Leading offerings will distinguish themselves through features such as collateral mobility, instant liquidity, peer-to-peer transfers, and daily interest payments, driving broader adoption across the market.

Cost-efficient offerings will also play a key role in fostering sustained growth across diverse market segments by attracting new institutional investors.

Tokenised treasuries and other RWAs are poised to redefine global finance. By addressing inefficiencies such as delayed settlements, high transaction costs, and restricted access, tokenised assets present an opportunity to create more inclusive, efficient, and scalable financial markets. As interest rates decline and demand for secure, yield-generating options rises, the utility and appeal of tokenised offerings will only continue to grow.

The next phase of this market will be defined by platforms that integrate robust legal frameworks, cutting-edge technological innovation, and an investor-centric design philosophy. By building trust and unlocking new efficiencies, Fasanara believes tokenised assets are positioned to transform both TradFi and DeFi, fostering a more dynamic, accessible, and inclusive global financial system.

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