Assets can now be tokenised, and traded on distributed ledgers, 24/7. The scale of trades could take off with harmonised regulation and benefits of efficiency, but systemic financial risks could increase
In August, the Qatar cabinet approved a draft law that approves and regulates the emerging technology of tokenisation of assets, specifically covering real estate. Tokenisation allows for the representation of real-world assets, and fractions of assets, on a distributed ledger.
It is part of a niche, but growing trend in financial markets. Tokenisation enables continuous, real-time transactions across a ledger.
What does this mean, in practice? Tokenisation enables an illiquid asset, such as property, to be divided into individual items, or tokens, represented and traded on a digital ledger. The technology can increase access to investment options previously restricted to wealthy institutions.
The Qatari initiative is in line with the government’s Third National Development strategy, and is part of a pragmatic policy of encouraging innovation while managing risks. The draft law defines the nature of the real estate token and the rights of its holder, would regulate the trade, and link it directly to the real estate registration system.
Tokenisation is not confined to property. Bonds, repos and equities are also represented on distributed ledgers.
In September, the Securities and Exchange Commission of the US approved the temporary, conditional Innovation Exemption, permitting limited trade of tokenised stocks on specified Tokenised Securities Venues. In this way companies can create a market for tokenised shares without being treated legally as an exchange. As well as approving and encouraging the technology, the SEC wishes to monitor its development in order to inform future policy-making.
In 2023, the Hong Kong government issued the world’s first tokenised government green bond. In successive issuances in 2024 and 2025, participation was increased through the use of a dual-access model, through which investors could participate directly through the distributed ledger technology platform or indirectly through the Central Moneymarkets Unit. This boosted take-up. The cumulative issuances through 2025 total around $2.2bn. A fourth offering of around HK$20bn was announced in September 2026.
Overall, adoption of distributed ledgers for financial trading remains fragmentary. Some of the benefits are those of digitalisation more generally, of which tokenisation is just one example.
Tokenisation of equities is currently a small sector, dominated by two platforms: Ondo Finance and Backed Finance account for more than 70% of tokenised equity value, and the tokenised equity market size amounts to an estimated $2.3bn as of July 2026.
Fractionalisation of assets can help with financial inclusion. Research cited by the IMF in its recent report showed that around 80% of tokenised equity trades are executed in sizes below one share, indicating a user base of smaller retail participants. The 24/7 feature of the distributed ledger is appealing to the many retail investors living in different time zones to the US.
Institutional players are more prevalent in tokenised trades in bonds, money markets and repos. In the repo market, collateral management and collateral mobility present an early-use case for tokenisation, the IMF reports. Assets may be immobilised in traditional accounts, or held off-chain while represented as a token on distributed ledger technology on a one-to-one or fractional basis. The 30-day average daily volume of tokenised repos has reached $303bn.
Potential benefits are reduced reconciliation costs, the ability to mobilise collateral more efficiently, shorten settlement times and automate post-trade functions. Benefits can accrue without fully harmonised regulation or universal inter-operability.
Excluding repos, stablecoins and private tokenised markets, the market for tokenised real-world assets was around $65bn as of July 2026, and has been growing rapidly.
There is an issue in the nature of intra-day, or real-time trading. The IMF report notes that some prudential metrics, such as leverage ratio limits, are snapshot, point-in-time measures, not obviously compatible with real-time, 24-hour trading.
Probably the biggest barriers to further development of the sector are issues to do with trust, regulation and enforceability of contracts. Regulators recognise the principle of ‘same activity, same risk, same regulatory outcome’, irrespective of technology platform.
Distributed ledgers often feature smart contracts – in which transactions are automatically completed upon fulfilment of agreed terms. They improve efficiency, but raise issues around choice of jurisdiction in the event of dispute, and require careful construction.
Some of the greater friction from traditional trading results from measures that enhance risk mitigation. The IMF issues a reminder that intermediaries such as custodians, central securities depositories, and central counterparties coordinate activity across diverse infrastructures to maintain trust in the transaction process.
As regards technology, it is not likely, and possibly not advisable, for all tokenized assets to be on the same platform, although consolidation to a small number is possible.
For regulators, the appearance of new channels through which contagion of financial distress could spread is an issue to address. The IMF report offers as an example the greater collateral mobility with tokenised repo which could lead to the use of collateral across platforms, supporting larger leveraged positions.
There will need to be oversight to ensure distributed ledgers do not facilitate the financing of terrorist organisations.
Tokenisation does not exempt transactions from applicable laws regarding financial crimes such as fraud, or regulatory requirements such as ‘Know Your Customer’ and Anti Money Laundering.
While the value of tokenised trades is small as a proportion of the financial sector, development of regulation and standards could encourage further take-up. And network effects are such that, above a tipping point, growth could accelerate rapidly.
The author is a Qatari banker, with many years of experience in the banking sector in senior positions.