Tokenise stocks, bonds, funds, but proceed with care

EARLIER this year, Singapore jailed three Chinese nationals for putting strong glue on their palms to steal casino chips from other gamblers. Substitute “chips” with digital tokens, and “glue” with deceptive computer code, and you could be talking about theft of bonds, equities, mutual funds or any other ownership interest that can have a parallel life on the blockchain.

Turning financial securities into cryptographic representations that can be bought and sold in tiny fractions of what is possible today opens up a new avenue for the masses to accumulate wealth. Using blockchains to democratise finance is an idea that Asia, in particular, has fallen in love with.

Last week, the Singapore central bank announced five new pilots – in partnership with Ant Group Co, Franklin Templeton, JPMorgan Chase & Co and other private-sector players – to explore different aspects of tokenisation. Hong Kong’s Securities and Futures Commission issued a circular this month for those planning to bring tokenised digital assets to the market.