Infrastructure finance and the new economy: A case for tokenising

A LARGE funding gap exists in the infrastructure space. Available funding covers only 10 per cent of sanctioned projects (about US$730 billion per annum), while 90 per cent of financing for Asian infrastructure projects comes from the public sector. To that end, private sector participation has been prescribed as a remedy for the funding shortfall - but this solution still, admittedly, also requires a supportive ecosystem to render the infrastructure assets more palatable and tradable. We believe that asset tokenisation via blockchain technology can play an important role in developing this ecosystem.

Blockchain is essentially a ledger, a copy of which is owned by every participant in a network, and into which new entries are entered only through majority consensus. This ensures transparency, security, and immutability - three crucial characteristics for investor confidence.

These characteristics - inherent to blockchain - reduce, or even completely remove, the need for intermediaries, leading to significant time and cost savings. Putting securities onto the blockchain would turn them into "tokens": digital representations of the security that exist only on the blockchain, and in this article's case, they would be backed by the full faith and collateral of the infrastructure assets underlying them. Tokens are the modern-day Digital Asset-Backed Security.