The new UK/Singapore study highlights a widening “adoption gap” between what tokenisation could enable and what the buy-side is realistically prepared to implement today.
A joint report from the UK’s Investment Association (IA) and Singapore’s Investment Management Association of Singapore (IMAS), released with support from both the FCA and MAS, warns that despite the rapid maturation of tokenisation technology, institutional investors remain hesitant to adopt digital asset products at scale.
According to the findings, the promise of faster settlement, programmable assets, and greater operational efficiency is not enough to overcome the structural and regulatory frictions that concern institutional investors. The report underscores that liquidity remains a central sticking point: while tokenised assets can be issued easily, institutions expect the same depth of secondary-market access and reliable exit mechanisms they enjoy in traditional markets. Many current platforms fall short of enabling block-style trades or offering predictable market-making, creating uncertainty around real tradability.
Custody is another major barrier. The study shows that traditional investors are uneasy with key-management models, the fragmentation of custody providers, and the lack of harmonised legal frameworks for safeguarding tokenised securities. This is closely tied to a broader concern over investor rights. Institutions want clear, enforceable processes for corporate actions, redemptions, transfers, and voting. Yet these mechanisms often vary significantly across tokenisation platforms, creating operational ambiguity.
The report also highlights a persistent gap in regulatory clarity. While both the UK and Singapore have advanced regulatory sandboxes and pilot regimes, institutional investors continue to call for consistent rules that define asset classifications, settlement finality, and liability models. Without this clarity, even well-designed tokenised products struggle to attract meaningful capital.
Underlying all these issues is a broader theme: the current wave of tokenisation innovation is often designed around technological capability rather than buy-side requirements. As the report emphasises, the industry must shift focus from building what is possible to building what is institutionally usable. This includes strengthening governance frameworks, providing robust investor protection, and ensuring operational readiness through scalable infrastructure, transparent fee structures, consistent service levels, and resilient controls.
To close the adoption gap, the IA and IMAS announced new collaborative workstreams aimed at standardising best practices, improving interoperability, and accelerating alignment between investors, issuers, custodians, and regulators. These efforts build on existing initiatives such as Singapore’s Project Guardian and the UK’s Investment Fund 3.0 Lab, both of which seek to modernise capital markets infrastructure for a tokenised future.
The message of the report is unambiguous: tokenisation holds transformative potential, but institutional adoption will only accelerate when products and market infrastructure are designed around the needs, expectations, and risk frameworks of the buy-side. Until then, the technology’s promise will remain ahead of its practical uptake.
