I recently attended the DigiAssets Conference in London, which I found very interesting as it focused heavily on the institutional trading space. The topics, panel participants, and speakers were deeply engaged in digitised crypto and DeFi.

The real-life benefits of tokenisation

One topic that resonated with me was enabling investment in non-bankable assets. Music royalties, farming and mining are examples of areas where tokenisation can be beneficial as it helps convert non-bankable assets into something bankable. You could do this today in an SPV, for example, but the key to volume, lower initial costs of asset creation, and short time to market, is to standardise the process to simplify, automate and expedite asset creation. Through standardisation, it becomes much easier for banks and investors to understand the assets and determine how and if they can invest in them, and whether they will be cost-effective to create.

One great example mentioned at the conference is the ability to invest in smallholding cattle farmers in Bolivia. These farmers typically don’t even have bank accounts, but they operate potentially profitable businesses if they are helped with small initial investments. Tokenisation allows for revenue sharing in these ventures, providing new investment opportunities for the right capital. 

The wild west?

As the conference progressed, there was a noticeable tension between the traditional institutional investment industry and the digitised securities evangelists. Institutional investors wanted real-world, concrete examples that are live—they needed to understand the risks, the asset’s location, and its custody. In contrast, the digitised securities advocates often spoke about principles and ideas in more abstract terms. The investors were ready to engage but needed clear answers to their questions.

One reason for this gap is the lack of maturity in the current projects and the supporting regulation. The initiatives are not yet developed enough, and regulatory frameworks are still catching up. To illustrate this gap, crypto enthusiasts tend to celebrate the size of the largest Bitcoin ETFs, which are around $100 million under management. Institutional investors view this amount as negligible. This cultural disconnect highlights the need for scalable solutions that meet institutional expectations.

Winner takes all

Yet the potential here is enormous. Digital assets are poised to have an impact on the institutional world similar to how the internet revolutionised retail in the 1990s. 

The question is, who will be the first-mover ‘Amazon’ or ‘Google’ of the cryptoworld? Everyone agrees it will happen; it’s just a matter of when and who will lead the charge. This space is ripe for the taking. The first entity to successfully bridge this gap with a comprehensive, scalable solution will likely dominate the market, securing a first-mover advantage.