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Once a technical detail confined to fraud prevention, tokenization has become one of the most strategically significant developments in global finance.
Tokenization moves centre stage
From protecting card payments to enabling central bank experiments with digital assets, the technology is moving from niche application to the foundation of next-generation payments and markets.
At its simplest, tokenization replaces sensitive data with a surrogate “token” that can be safely transmitted across networks.
In the consumer payments world, this process has already reached immense scale.
Visa now issues billions of tokens globally, covering nearly half of all online transactions, while Mastercard has disclosed that almost half of Europe’s e-commerce payments are already tokenised.
Both card networks see tokenisation not just as a defensive tool against fraud, but as an enabler of new digital commerce models.
Mastercard’s Agent Pay initiative, for example, embeds token services into agent-driven shopping journeys, subscription payments and loyalty linking.
Not Limited to Cards
The momentum is not limited to consumer cards. Real-world asset (RWA) tokenisation is reshaping how traditional financial instruments are traded and settled.
Institutions including BlackRock, Kraken and R3 are testing or deploying systems that transform equities, bonds and even real estate into blockchain-based tokens.
These tokens promise continuous trading, near-instant settlement and fractional ownership, potentially lowering barriers to entry for investors.
Kraken’s launch of tokenised US equities available to overseas clients is a striking example of how far the model has moved from pilot projects into real-world deployment.
The advantages are considerable.
Tokenisation enhances security by masking sensitive credentials, increases authorisation rates, and supports programmable features such as automated compliance or cross-border settlement.
For capital markets, it could mean a shift towards 24/7 operation, breaking the constraints of time zones and traditional clearing systems.
Yet obstacles remain.
Regulators in the US and elsewhere have yet to settle on frameworks for treating tokenised securities.
Questions about digital identity, privacy, smart contract resilience and cross-border interoperability continue to loom large. The Securities and Exchange Commission has signalled some willingness to engage, but consensus remains elusive.
Central Banks
Central banks are also entering the fray.
The Bank for International Settlements has argued that tokenised money and assets could replicate the efficiencies promised by stablecoins, without relying on privately issued currencies.
Joint experiments between the BIS and the Federal Reserve Bank of New York have already demonstrated how smart contracts might automate liquidity management or interest-rate policy.
Project Pine, exploring tokenised central bank reserves, illustrates how official infrastructures may evolve to integrate with tokenised securities and commercial bank deposits.
The trajectory is clear: tokenisation is no longer just about securing checkout flows, but about redefining the plumbing of global finance.
As private sector adoption accelerates and public institutions run increasingly ambitious pilots, tokenisation stands poised to underpin the next era of payments, settlement and capital markets.
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