Digital Assets Critical to Addressing Evolving Corporate Financing Needs – Standard Chartered
(11 July 2024 – Singapore) Trade finance tokenisation offers a major opportunity for exposure to new emerging market asset classes.
Given the projected 55 percent growth in global trade to US$32.6 trillion by 2030 according to Standard Chartered, there is a critical need to secure additional sources of capital to support future financing demand. Progressive institutions such as Standard Chartered are seeking to tackle this challenge by harnessing tokenisation which it sees as mutually beneficial for institutional investors, banks and companies in solving trade financing requirements.
Trade finance, which is often viewed as too complex to invest in in scale due to its multi-party and cross border nature, can be simplified through tokenisation, which packages assets in unstandardised ticket sizes into a single investable instrument. Trade finance assets could make up 16 percent of the total addressable market (TAM) for tokenised assets.
Tokenisation refers to the process of issuing digital representations of real or traditional assets in the form of a token on a distributed ledger which can be fractionalised into smaller and transferable units. Tokenisation could support companies in need of trade financing by opening a viable channel for institutional investors such as asset management companies and sovereign wealth funds to provide capital.
“Over the past year, we have witnessed a rapid acceleration in tokenisation initiatives, reflecting a significant shift towards more accessible, efficient and inclusive financial systems. In particular, real-world asset tokenisation of trade finance assets represents both a shift in how we perceive value and ownership, and a fundamental change in the mechanisms of investment and exchange” stated Standard Chartered Global Head, Trade & Working Capital, Kai Fehr.
“We see the next three years as a critical junction for tokenisation, with trade finance assets coming to the fore as a new asset class. To unlock this trillion-dollar opportunity, industry-wide collaboration among all stakeholders, from investors and financial institutions to governments and regulators is critical” Fehr added.
“Recognising the transformative potential of real-world asset tokenisation across industries, we began tokenising our own profits in 2021 at Synpulse in the context of an employee participation program. It is encouraging to witness tokenisation gaining momentum among our clients and the broader market. This growing acceptance not only validates our early initiatives but also heralds a future filled with exciting opportunities” commented Synpulse Managing Partner & Group CEO, Yves Roesti.
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