First published in the Financial Times.
Tokenisation is now a strategic priority for financial institutions, yet adoption remains cautious. Despite clear efficiency benefits - immediate settlement, lower cost, enhanced transparency and increased liquidity - several structural barriers have slowed real-world deployment.
The first is regulatory fragmentation. Global regulators take divergent approaches to defining virtual assets, securities and tokenised representations of traditional instruments. For institutions bound by strict compliance frameworks, the risk that a tokenised fund interest or security could fall unintentionally into a virtual asset regime remains a major deterrent.
The second barrier is the uneven maturity of supporting infrastructure. Blockchain networks have advanced quickly, but administrators, custodians, auditors and legal systems have not always adapted at the same pace. Institutions require environments where on-chain processes reinforce governance, investor protection and regulatory oversight—not bypass them.
A third challenge is the perception gap between digital assets and traditional finance. Asset managers want technological efficiency but not the reputational volatility associated with crypto-native markets. They need frameworks that treat tokenised instruments as conventional products delivered through modern infrastructure, rather than as part of the virtual asset ecosystem.
As a result, tokenisation is widely recognised as strategically important, but institutional execution remains measured. What managers increasingly require is a clear, trusted, well-regulated environment in which tokenised products can be launched without incurring unnecessary regulatory, operational or reputational risk.
Tokenisation as the leading institutional trend
Tokenisation is emerging as the most pragmatic mechanism for introducing digital infrastructure into mainstream finance. Unlike crypto-native assets, tokenised representations of securities or fund interests can sit comfortably within existing legal and regulatory frameworks, making tokenisation an upgrade to financial plumbing rather than a reinvention of financial products.
Three dynamics are accelerating adoption:
Operational efficiency: tokenisation enables faster and more automated processes across the investment lifecycle. Transfers, capital calls, redemptions and other events can occur on chain, reducing reconciliation and administrative burdens. The impact is particularly strong in private markets, where manual processes remain prevalent.
Improved access and liquidity: by enabling fractionalisation and more flexible issuance, tokenisation broadens investor access to private credit, infrastructure and alternative investments. It also opens pathways to secondary liquidity - both on chain and through digitally enhanced traditional markets -providing optionality for historically illiquid asset classes.
Regulatory compatibility: tokenised instruments can mirror the same rights and obligations as traditional securities or fund units. This alignment allows regulators to supervise them within established frameworks, such as investor qualifications and anti-money laundering requirements.
These advantages are already reflected in tokenisation pilots and commercial launches in money market funds, private credit strategies, infrastructure assets and broader real-world asset (RWA) issuances. At the same time, regulated stablecoins are emerging as credible tools for on-chain settlement, complementing tokenised instruments and enabling more efficient operational models.
Tokenisation is therefore not a parallel market to traditional finance. It is becoming the preferred pathway for institutions seeking to modernise financial infrastructure - precisely the environment in which Guernsey has positioned itself.
Guernsey enables and supports this institutional shift
Guernsey has become one of the most credible and practical jurisdictions for tokenised products - including tokenised funds, real-world asset (RWA) tokenisation and stablecoins. Its appeal is rooted in the alignment of digital asset innovation with regulatory clarity, structuring flexibility and institutional-grade infrastructure.
The island’s regulatory environment has been designed to support the development of tokenised finance within a familiar and trusted framework. The Guernsey Financial Services Commission (GFSC) has taken a pragmatic stance in its consultation Supporting Growth with Digital Finance, which endorses RWA tokenisation and recognises tokenised securities as controlled investments sitting within the traditional securities framework rather than the virtual asset regime, ensuring application of established investor-protection standards. The consultation also proposes a licensed, fully asset-backed stablecoin regime, allowing issuers to create redeemable coins backed by segregated liquid reserves held with regulated custodians. In parallel, the GFSC’s Innovation Sandbox offers tailored supervisory engagement for safely testing tokenised propositions.
Guernsey also provides structuring options suited to both innovation and institutional scale. Managers can utilise regulated fund regimes, including the fast-to-market, cost-efficient Private Investment Fund (PIF), or establish SPVs for single investor or single asset strategies. While these SVPs fall outside the collective investment scheme regulation, they are required to appoint licensed fiduciaries for governance. This flexibility enables financial institutions and managers to pilot tokenised products efficiently and transition to regulated structures as strategies grow. Guernsey also offers SPVs, which are well-suited for stablecoin and RWA token issuers.
This is supported by a growing innovation ecosystem. Although Guernsey’s asset management sector is long established, recent years have seen an influx of technology entrepreneurs, digital asset specialists and venture capital managers. The island now ranks among the leading European jurisdictions for regulated VC fund domiciliation, supported by a growing pipeline of private, unregulated vehicles. The ecosystem continues to expand through initiatives such as quarterly investor–founder forums connecting innovators with capital, a forthcoming private-sector-backed grant programme for first-time managers, and specialist service-provider initiatives, including female-founder launchpads and a digital asset industry body.
These developments position Guernsey as a leading jurisdiction for the next generation of tokenised financial products and stablecoins.
