IOSCO Backs Asset Tokenization and Alternatives

IOSCO, the International Organization of Securities Commissions, like Spain’s CNMV, or the French AMF, is the global standard-setter for securities regulation. Its main goals are to protect investors, ensure fair and efficient markets, and reduce systemic risk by promoting high standards and sharing information among its members, which include more than 95% of the world's securities markets.

The Board of IOSCO recently published Tokenization of Financial Assets, a review of how distributed ledger technology (DLT) is actually being used in capital markets today, with a particular focus on bonds and money market funds (MMFs). Along the way, it shines an important light on the future of alternative assets—private equity, real estate, private credit, commodities and other traditionally illiquid exposures.

This post distils that report through a practical lens:

• What does IOSCO mean by tokenization?
• Where is it delivering measurable benefits?
• How is it changing the lifecycle of financial assets?
• What does all of this imply for alternative assets and their investors?

What IOSCO means by “tokenization”

IOSCO synthesizes definitions from the BIS, IMF and FSB and lands on a clear idea: tokenization is the creation, issuance or representation of financial assets on a digital token ledger. Tokenization is associated with four core features:

Fractionalization

Dividing assets into smaller, fungible pieces, reducing minimum tickets and making products accessible to a wider investor base.

Programmability

Embedding code-based instructions that execute automatically when specified conditions are met: coupon payments, corporate actions, margin calls, portfolio rebalancing, etc.

Composability

Re-using and combining pre-programmed components to create new instruments, workflows and transaction types.

Atomicity

Executing multi-leg transactions as all-or-nothing operations in a single workflow, reducing settlement risk and failed trades.

Taken together, these features can:

1. Reduce market frictions such as search costs and reconciliation;
2. Expand access to financial products and services;
3. Improve capital efficiency and liquidity management;
4. Enable new types of products, especially around collateral and alternative assets.

The IOSCO report tests these claims against the evidence emerging from live, functioning markets, where tokenization is increasingly framed within the principle of “same activity, same risk, same regulatory outcome”, rather than as an unregulated frontier.

Where tokenization is already delivering

The most notable parts of the report are where IOSCO points to quantitative data instead of generic promises.

Tokenized bonds: lower costs, tighter spreads

An HKMA research memorandum (Leung et al., 2023) compared tokenized bonds with comparable conventional bonds. IOSCO summarizes the results as follows:

• 25.8% reduction in average underwriting fees.
• 23.9% reduction in average yield spreads-
• 5.3% reduction in average bid-ask spreads.

IOSCO explicitly notes that these reductions are economically significant and uses them as evidence that the benefits of tokenization are not merely theoretical. In parallel, the report finds that bonds are perceived as the asset class most likely to be tokenized, reinforcing the idea that fixed income is the beachhead for institutional tokenization.

Portfolio management: less cash drag through programmability

Under Project Guardian, J.P. Morgan and Apollo analyzed tokenization’s impact on portfolio management. IOSCO highlights one concrete outcome: Programmable DLT can be used to automatically deploy excess cash into investments as soon as it becomes available.

Assuming:

An average manager holds ≈3% cash, and

A balanced portfolio generates ≈8% over cash long term,

The result is about 24 basis points of cost reduction for the end client, purely by reducing cash drag through automation. This is a simple but powerful illustration: the automation aspect of tokenization (programmability) can directly improve net performance without changing the underlying assets.

Collateral and repo: a $40+ trillion playground

IOSCO leans heavily on WEF, GFMA and AFME data for collateral and repo markets, which are central to institutional liquidity.
Global collateral market: estimated at > $25 trillion.

Global repo market: > $15 trillion outstanding, with $3–4 trillion daily turnover.

These are precisely the markets where tokenization’s speed, atomic settlement, and composable collateral flows are most beneficial. GFMA, as cited by IOSCO, estimates that programmable ledger-based collateral management could unlock more than $100 billion annually in capital that could be redeployed for higher-efficiency uses.

IOSCO then points to live platforms:

Broadridge Distributed Ledger Repo (DLR)

Processes about $2 trillion in transaction value per month. Its intraday repo solution delivers an estimated 50–60% reduction in transaction costs and better liquidity management.

Kinexys by J.P. Morgan

A multi-asset tokenization platform for MMFs, repos and bonds. By November 2024, it had processed over $1.5 trillion in notional since launch, with average daily volume of more than $2 billion.

These are not prototypes: they are high-volume, production systems integrating tokenized assets into the core machinery of treasury, collateral and liquidity.

Tokenized money market funds: from experiment to infrastructure

For MMFs, IOSCO notes that tokenized funds have attracted billions in AUM in just a couple of years. Issuers include established managers such as BlackRock and Franklin Templeton and specialist tokenization players and fintechs (such as Token City).

Beyond efficiency in issuance and administration, IOSCO highlights that tokenized MMFs are already being used as:

• Reserve assets backing stablecoins;
• Collateral for crypto-related transactions;
• Treasury instruments in both traditional and digital markets.

A key point is functional differentiation. Tokenized MMFs tend to be used for treasury management and collateral, while stablecoins are primarily used as liquidity and payment instruments. This is exactly the kind of complementarity that many real-world asset (RWA) advocates have argued for.

How tokenization reshapes the asset lifecycle

IOSCO structures its analysis around lifecycle activities: issuance, trading, clearing and settlement, custody and collateral management. The message is that not that everything is being replaced, but that targeted components become more efficient and flexible.

IOSCO highlights the native on-chain model, under which value is issued directly in the form of a token on blockchain. This model, which Token City applies, is designed to cover the full spectrum of benefits: programmable lifecycle, atomic settlement, automated servicing, and deeper integration with new rails such as CBDCs or tokenized deposits.

The UBS digital bond on SIX Digital Exchange (SDX) is IOSCO’s flagship example: a native tokenized UBS bond that trades on a digital venue but remains fully interoperable with the traditional SIX Swiss Exchange and SIX SIS CSD infrastructure. The message is important: tokenization can be layered into existing issuance ecosystems without disrupting legal status or investor protections.

Growth expectations for real-world tokenization

IOSCO compiles growth projections from several major industry studies. Without going into asset-class breakdowns, three headline numbers stand out:

McKinsey (2024) estimates tokenized financial assets (excluding crypto and stablecoins) could reach roughly $2 trillion by 2030, with a range of about $1–4 trillion.

Ripple & BCG (2025) project tokenized real-world assets (RWAs) growing from roughly $0.6 trillion in 2025 to a midpoint of $18.9 trillion by 2033 (with a wide range around that figure).

Standard Chartered & Synpulse (2024) forecast tokenized RWAs reaching up to $30.1 trillion by 2034.

The common thread across these studies, as presented by IOSCO, is that alternative and private market assets are expected to contribute meaningfully to that growth, not just public bonds and MMFs.

Strategic implications for practitioners and alternative asset managers

Putting everything together, the IOSCO report supports several strategic conclusions for anyone building in or allocating to tokenized markets, especially on the alternative assets side:

Tokenization is an efficiency layer, not a separate asset class.

The strongest evidence of benefits lies in cost, liquidity and operational metrics (e.g., underwriting fees, bid-ask spreads, repo costs, cash drag), not in speculative price appreciation.

Alternative assets are a natural fit.

The very features of tokenization IOSCO underscores—fractionalization, programmability, composability and atomicity—directly attack the core frictions of private markets: illiquidity, high minimums, complex cashflow waterfalls and opaque secondary markets.

The path is evolutionary, not revolutionary

Real-world examples show tokenization being layered onto existing issuance, custody and settlement setups, not replacing them overnight. This is especially important for regulated alternative asset managers, who can plug into tokenization without rewriting their entire operating model.

Closing thought

IOSCO’s 2025 report is cautious, methodical, and explicit. Precisely for that reason, the evidence it highlights—lower bond issuance and trading costs, more efficient collateral markets, growing tokenized MMFs and meaningful progress towards tokenized funds and alternative assets—is all the more relevant for regulatory bodies.

Tokenization is becoming part of the core market infrastructure conversation. For alternative asset managers and investors, it is an invitation to rethink how access, liquidity and collateralization can work in a world where ownership, cashflows and collateral all live on programmable, composable rails.