Tokenization in Focus:
Private Sector Research
Private Sector Research
The private sector is diving deep into tokenization technology. Financial giants, top payment providers, tech companies, and various commercial organizations are not only researching this technology but also developing their own blockchain solutions to practically assess the benefits of tokenization.
Let’s take a closer look at the initiatives of the most active players.
Let’s take a closer look at the initiatives of the most active players.
Major Corporations
Leading the charge in implementing the technology are payment giants Mastercard and Visa. Both corporations have launched their own blockchain solutions that showcase the potential of real-world assets (RWA) and provide robust infrastructure for tokenized assets.
Mastercard
In the summer of 2023, Mastercard developers introduced the Multi-Token Network (MTN), an innovative platform designed for secure, scalable, and interoperable blockchain transactions. Essentially, the MTN is a set of tools and standards that allow users to develop and implement new business models based on tokenized bank deposits and other digital assets.
Several financial institutions have recognized the advantages of the MTN. For instance, Standard Chartered Bank, in collaboration with Mox Bank and Libeara, utilized the MTN to perform atomic swaps between tokenized deposits and tokenized carbon credits.
In the summer of 2023, Mastercard developers introduced the Multi-Token Network (MTN), an innovative platform designed for secure, scalable, and interoperable blockchain transactions. Essentially, the MTN is a set of tools and standards that allow users to develop and implement new business models based on tokenized bank deposits and other digital assets.
Several financial institutions have recognized the advantages of the MTN. For instance, Standard Chartered Bank, in collaboration with Mox Bank and Libeara, utilized the MTN to perform atomic swaps between tokenized deposits and tokenized carbon credits.
Visa
The payment giant launched the Visa Token Service (VTS) back in 2014. It’s an innovative solution that provides a secure environment for online payments by replacing sensitive payment information with digital identifiers. Essentially, this solution tokenizes information and creates a token that can be used to make payments without revealing actual bank account details. By 2023, the service had generated 1 billion such tokens in the Asia-Pacific region alone.
Visa also established a special research unit, Visa Research, which studies advanced technologies, including tokenization, to develop new solutions in digital payments. Additionally, Visa actively participates in various international and government projects, such as assisting the Hong Kong Monetary Authority in developing CBDCs and exploring the potential of tokenized deposits.
The payment giant launched the Visa Token Service (VTS) back in 2014. It’s an innovative solution that provides a secure environment for online payments by replacing sensitive payment information with digital identifiers. Essentially, this solution tokenizes information and creates a token that can be used to make payments without revealing actual bank account details. By 2023, the service had generated 1 billion such tokens in the Asia-Pacific region alone.
Visa also established a special research unit, Visa Research, which studies advanced technologies, including tokenization, to develop new solutions in digital payments. Additionally, Visa actively participates in various international and government projects, such as assisting the Hong Kong Monetary Authority in developing CBDCs and exploring the potential of tokenized deposits.
IBM
Among the major corporations exploring the possibilities of tokenization, the efforts of the American tech giant IBM stand out. IBM is actively engaged in the development and implementation of blockchain solutions. The IBM Blockchain platform provides the tools and infrastructure needed to create and manage tokenized assets, allowing organizations to leverage DLT systems to enhance process efficiency. Notably, IBM has launched projects such as We.Trade, which simplifies and secures international trade transactions, and the Food Trust protocol, which uses tokenization to track and manage supply chains in the agricultural sector.
IBM also collaborates with various companies to develop tokenization solutions for real estate and financial assets. The company has participated in several pilot projects launched by investment firms to test tokenization of different asset classes.
Among the major corporations exploring the possibilities of tokenization, the efforts of the American tech giant IBM stand out. IBM is actively engaged in the development and implementation of blockchain solutions. The IBM Blockchain platform provides the tools and infrastructure needed to create and manage tokenized assets, allowing organizations to leverage DLT systems to enhance process efficiency. Notably, IBM has launched projects such as We.Trade, which simplifies and secures international trade transactions, and the Food Trust protocol, which uses tokenization to track and manage supply chains in the agricultural sector.
IBM also collaborates with various companies to develop tokenization solutions for real estate and financial assets. The company has participated in several pilot projects launched by investment firms to test tokenization of different asset classes.
Commercial Banks
Tokenization has attracted significant attention from TradFi participants. Leading commercial banks are actively researching and testing the technology to improve financial operations and create new opportunities for their clients:
Societe Generale. In 2019, this financial giant launched SG Forge, a solution for tokenizing financial assets, which led to the issuance of the first tokenized bond on the Ethereum blockchain. The conglomerate continues to develop tokenization solutions for debt securities, equities, and other financial instruments in collaboration with various financial institutions and tech companies.
BNY Mellon. In 2022, one of America’s largest banks, BNY Mellon, launched Digital Asset Custody, a platform for digital asset storage. The platform serves as a foundation for developing infrastructure to manage digital assets and tokenization solutions.
UBS. In 2022, the bank conducted an experiment with bond tokenization, assessing the potential of DLT systems for issuing and managing securities. In 2023, UBS launched a pilot project to tokenize a Variable Capital Company (VCC) investment fund and collaborated with the World Economic Forum (WEF) on initiatives to develop global standards for real-world assets (RWA).
Goldman Sachs. In 2023, Goldman Sachs launched GS DAP™, a platform for trading tokenized assets, enabling clients to record ownership rights and track asset movements.
JP Morgan. This investment conglomerate is actively involved in pilot projects testing tokenization. JP Morgan assisted the European Investment Bank (EIB) in testing tokenized bonds and collaborated with the Monetary Authority of Singapore (MAS) to explore the creation of a platform for cross-border payments and settlements involving tokenized assets.
Citi. In 2023, the bank launched Citi Token Services, a private blockchain platform providing digital solutions to institutional clients. This year, Citi reported successful tests of private equity fund tokenization and joined the global Hyperledger Foundation initiative.
BNY Mellon. In 2022, one of America’s largest banks, BNY Mellon, launched Digital Asset Custody, a platform for digital asset storage. The platform serves as a foundation for developing infrastructure to manage digital assets and tokenization solutions.
UBS. In 2022, the bank conducted an experiment with bond tokenization, assessing the potential of DLT systems for issuing and managing securities. In 2023, UBS launched a pilot project to tokenize a Variable Capital Company (VCC) investment fund and collaborated with the World Economic Forum (WEF) on initiatives to develop global standards for real-world assets (RWA).
Goldman Sachs. In 2023, Goldman Sachs launched GS DAP™, a platform for trading tokenized assets, enabling clients to record ownership rights and track asset movements.
JP Morgan. This investment conglomerate is actively involved in pilot projects testing tokenization. JP Morgan assisted the European Investment Bank (EIB) in testing tokenized bonds and collaborated with the Monetary Authority of Singapore (MAS) to explore the creation of a platform for cross-border payments and settlements involving tokenized assets.
Citi. In 2023, the bank launched Citi Token Services, a private blockchain platform providing digital solutions to institutional clients. This year, Citi reported successful tests of private equity fund tokenization and joined the global Hyperledger Foundation initiative.
Blockchain Companies
Innovative financial firms are also contributing significantly to the study and testing of tokenization technology. The most active here is Chainlink Labs, the developer of the oracle network. In 2023, Chainlink Labs introduced the Cross-Chain Interoperability Protocol (CCIP), a service for cross-chain interaction between blockchain networks and TradFi organizations. This protocol proved useful for testing various tokenized assets, with several major financial companies experimenting with the service:
- SWIFT tested the CCIP for exchanging tokenized assets issued by commercial banks across different blockchain networks;
- The Australia and New Zealand Banking Group (ANZ) used the CCIP to trade tokenized assets within Australia;
- The Bank of New York Mellon explored the protocol’s potential for tokenizing traditional financial assets;
- The Depository Trust & Clearing Corporation (DTCC) tested the CCIP for transferring tokenized net asset value (NAV) data.
In summary, most private sector initiatives focusing on studying and testing tokenization technology aim to enhance customer services and develop new financial products. However, without a clear regulatory framework, which is in the focus of government regulators, the technology can’t realize its full potential in the global economy.