Tokenised Securities: The Infrastructure of Tomorrow's Capital Markets

1. Introduction

Tokenised securities are a digital form of traditional financial assets, issued and recorded on a distributed ledger or blockchain, that represent ownership rights as digital tokens. Building on this foundation, tokenised securities are moving from experiment to execution and are emerging as an infrastructure layer for tomorrow’s capital markets. Distributed ledger technology (DLT) is reshaping issuance, trading and post trade processes, and is expanding the global opportunity for tokenisation across asset classes. Although DLT based capital markets are still modest in size relative to the overall financial system, growth since 2023 has been substantial and is clearly accelerating, signalling a structural shift rather than a passing trend.¹ A key enabler of this shift is the emergence of digital forms of money. Tokenised assets need a settlement asset that can move with the same speed and programmability as the security itself. Regulated fiat referenced stablecoins, tokenised deposits and other forms of digital money can therefore form a critical bridge between traditional cash, securities settlement and on chain markets. As stablecoin regulation (e.g. U.S. GENIUS Act) becomes more defined across major jurisdictions, the practical feasibility of tokenised securities markets increases. The relevance of tokenisation is not limited to operational efficiency. It can reshape how financial instruments are distributed, transferred, used as collateral and integrated into digital settlement ecosystems. In particular, tokenised money market funds, tokenized debt instruments and tokenised private market instruments show how traditional securities can become more liquid, programmable and interoperable, making tokenisation relevant not only for capital markets infrastructure, but also for investment management, treasury, collateral management and future client propositions.

2. On-Chain and Hybrid Models

A precise understanding of tokenisation requires clarity about where value and legal authority reside. The legal and operational character of the instrument drives their regulatory treatment, liquidity mechanics and custody obligations.

2.1. Fully On-Chain

In a fully on chain model, the token is the legal instrument. There is no separate authoritative register, and the ledger entry constitutes the security itself. Switzerland’s DLT Act achieves this through register value rights, whereby the existence of register value rights is defined entirely by their ledger entry, with legal equivalence to certificated instruments under Swiss law. The Bank for International Settlements (BIS) highlights this as a transformative model, one where tokenisation enables genuinely new market structures rather than merely improving existing ones.²

2.2. Hybrid: On-Chain and Off-Chain Together

Most tokenised funds and other tokenised securities today use a hybrid model involving both on chain and off chain components. Legal authority remains with an off chain register and the traditional instrument documentation (for example the fund prospectus or bond terms); whilst operational control and settlement are executed on chain, with the ledger acting as the primary front end for transfers, compliance checks, and collateral movements. For tokenised money market funds (TMMF) specifically, on chain investor onboarding and the transfer agent function are implemented via smart contracts and allowlists, automating KYC/AML, investor eligibility and distribution restrictions, with tokens used for peer to peer transfers and as collateral in both decentralised and traditional finance. Off chain, the fund administrator continues to perform net asset value (NAV) calculation, portfolio accounting, regulatory reporting and maintenance of the formal shareholder register. There are rules for reconciliation between the ledger and the off-chain register. The hybrid model can extend to tokenised bonds, equities and other instruments, where today’s registers and central securities depository processes limit intraday liquidity.

3. Use Cases: The Framework for Tokenisation

Three novel use cases have emerged, enabled by tokenisation in ways that were not legally or operationally feasible in the pre DLT environment.⁴

3.1. Use Case I — Secondary Market Liquidity

Tokenised securities can trade peer to peer on chain 24/7 with near instant settlement, instead of being limited to market hours, subscription/redemption windows or T+1/T+2 cycles. For tokenised MMF shares, this enables a continuous liquidity pool that legacy account based fund infrastructure, tied to daily NAV cut offs, cannot support. However, tokenisation only enables continuous transferability; it does not guarantee deep liquidity, which still depends on market participation, product design, market making, redemption terms and the availability of regulated venues.

3.2. Use Case II — DeFi Reserve Asset

A use of high quality tokenised securities is emerging as reserve assets for decentralised finance and other on chain products that require robust collateral. Tokenised MMF shares are currently the most visible example: they offer a yield bearing, high liquidity alternative to non interest paying stablecoins, while retaining the risk profile of underlying money market instruments.

3.3. Use Case III — Collateral in Repo Markets and Traditional Finance

Tokenised securities can be pledged and recalled programmatically via smart contracts, enabling mobility of intraday collateral in repo, central bank operations and bilateral margining. For TMMF, this means fund shares can move rapidly between trading venues, custodians and counterparties without manual instructions. For tokenised bonds and other assets, it opens the door to unified collateral pools spanning on chain and off chain markets. The BIS sees repo as a key area for application across central bank reserves, commercial bank money and government securities, with potential benefits for liquidity, collateral management and monetary policy transmission.³

4. What Tokenisation Changes for Asset Managers

Tokenisation creates opportunities across the investment management value chain. As these use cases, appropriately designed and governed tokenised securities can address long standing structural constraints (e.g. daily NAV, T+2 settlement) by enabling continuous settlement, intraday collateral mobility and smaller investment tickets with more precise accrual of income over time – but only if the transaction lifecycle is 100% DLT based. Tokens can settle on a near real time basis, be pledged and recalled programmatically across decentralised and traditional finance and be held in fractional units that lower minimum investment thresholds. Smart contract logic can embed regulatory, liquidity and other risk controls (e.g. concentration limits or redemption gates) directly into the instrument’s operational fabric. The financial stability dimension must be acknowledged alongside these benefits. Liquidity transformation is the primary risk channel. The same infrastructure enabling instantaneous redemption for a calm investor allows equally instantaneous exit for a panicked one.⁵

5. Asset Classes: Switzerland's Emerging Tokenisation Landscape and Key Benefits

Switzerland’s DLT Act is asset class agnostic, so almost any security can be issued as a ledger based (tokenised) instrument. The Act defines ledger based securities, introduces prudential supervision for crypto asset custodians and a specific DLT trading licence, giving Switzerland a broad legal base for tokenised markets. Below, we summarise the specific challenges and key benefits for each asset class.

5.1. Government and Corporate Bonds

Fixed income is the most mature tokenised asset class, both in Switzerland and globally.¹ The benefits specific to fixed income tokenisation include automation of coupon payments via smart contract, reducing the operational overhead cost of periodic cash distributions; real-time register of beneficial ownership (improving transparency for issuers and regulators); and repo-ready collateral, enabling the bond to serve as programmatic collateral.

5.1.1. Limitations of Traditional MMF

Today’s MMFs face structural constraints: shareholder records are updated only once daily after the NAV cut off, yields are typically paid monthly, and redemptions take at least 24 hours and must pass through intermediaries. These frictions stem from a legacy account based infrastructure, not from regulatory requirements. Bloomberg estimates total MMF AUM at approximately $8.3 trillion as of May 2026.⁶ This is a substantial pool of liquidity managed through infrastructure that has not fundamentally changed since the 1970s. Today even the largest institutional MMF investors cannot access intraday liquidity from their MMF holdings, cannot use those holdings as real-time collateral without manual intermediation, and cannot earn proportional yield for sub-daily holding periods.

5.2. Equities

Tokenised equity is an active and growing segment in Switzerland.⁷ The Capital Markets and Technology Association’s CMTA Token (CMTAT) framework provides an open source, FINMA compatible standard for tokenising equity and debt securities, including structured products. CMTAT tackles the historical lack of smart contract standardisation by offering a technology neutral, audited and legally mapped template. For issuers, equity tokenisation materially improves shareholder register management. Where an issuer constitutes securities as register value rights (Registerwertrechte) under the DLT Act, (...). Corporate actions such as dividends, voting and rights issues can be automated via smart contracts, reducing the cost and complexity of maintaining a shareholder register, particularly for smaller and mid cap companies.

5.3. Real Estate

Real estate is often cited as a major use case for tokenisation in Switzerland, driven by inherent illiquidity and high minimum transaction sizes. Under Swiss securities law and FINMA guidance, real estate backed tokens are typically treated as securities, and the DLT Act provides the legal framework for issuing them as ledger based rights. The core benefits are threefold. First, fractionalisation: a CHF 50 million property can be divided into tokens accessible at lower minimum investment thresholds, broadening the investor base to family offices and mid size institutional allocators who would not meet the ticket size requirements of a direct property purchase. Second, secondary market liquidity: tokens traded on regulated platforms can create a secondary market in an asset class that is otherwise often locked until a full asset sale. Third, programmable income distribution: rental income can be distributed automatically and more frequently to token holders via smart contract, instead of relying on quarterly or annual distributions.

5.4. Private Credit

Private credit (i.e. direct lending to non-investment-grade corporates, infrastructure, and real assets outside the public bond market) is the asset class where the operational case for tokenisation is arguably strongest, precisely because it is currently the most opaque and illiquid. The global private credit market was estimated at approximately $3.5 trillion at the end of 2025.⁸ It is characterised by bespoke loan documentation, manual servicing, and near-zero secondary market liquidity. Tokenising private credit turns loan participations into transferable digital securities, laying the groundwork for a secondary market that largely does not exist today. Smart contracts can automate loan administration (interest, amortisation, covenant monitoring, default triggers), and on chain reporting improves transparency compared to periodic borrower/servicer reports.

5.5. Private Equity and Venture Capital

Private equity and venture capital are a particularly compelling but still relatively undeveloped area for tokenisation. They have the constraints that tokenisation aims to overcome: decade long lock ups, very high minimum commitments, manual capital calls and distributions, and almost no secondary market for limited partner (LP) interests. Tokenisation can fractionalise LP stakes, enable regulated secondary trading and automate capital calls, distributions and fees via smart contracts. Switzerland has a structural advantage: the 2024 Limited Qualified Investor Fund (L QIF) regime, combined with the DLT Act’s register value rights and existing platforms such as the SIX SIS AG, offer an efficient route to tokenised PE/VC structures and strengthen Switzerland’s position versus the Luxembourg RAIF. Large scale Swiss tokenised PE deals are not yet public, but the legal, market and standardisation building blocks are in place.

5.6. Structured Products

Switzerland is the world’s largest structured products market.⁹ These payoff dependent instruments (autocallables, barrier reverse convertibles, actively managed certificates, capital protection notes) involve complex lifecycle events that map directly onto smart contract logic: barrier monitoring, autocall trigger checks, coupon determination and conditional redemption can all be executed programmatically and verifiably on chain. The CMTAT framework supports structured products alongside equity and debt, and its modular design accommodates the bespoke features that characterise this asset class. For issuers, tokenisation reduces the operational overhead of lifecycle management that today demands dedicated middle office infrastructure. For investors, on chain transparency gives real time visibility into product status, such as barrier breaches, that is often opaque with conventional holdings.

5.7. Other Emerging Asset Classes

Beyond the categories above, the DLT Act’s asset class agnostic design also supports tokenisation of commodities, precious metals, carbon credits and high value collectibles. Tokenised gold and warehouse receipts can improve provenance and reduce double financing risk in commodity trading, while on chain carbon credits help address double counting concerns in voluntary carbon markets. Art, fine wine and similar assets can be fractionalised under the same register value-rights framework, though they remain niche.

6. Regulatory Landscape for Tokenised Funds

Tokenising regulated funds is primarily a legal/regulatory task, rather than a technology one. UCITS (Luxembourg/CSSF), US 40 Act MMFs (SEC Rule 2a-7) and Switzerland’s DLT Act all allow tokenised funds, but only if tokens, smart contract transfer logic, custody and record keep fully aligned with existing rules on eligible assets, disclosure, liquidity, and investor protection. Switzerland serves as a testing ground for fully on chain fund structures, while UCITS and US MMFs show that tokenisation can fit into current rulebooks without changing core protections.

7. Tax Considerations for Tokenised Securities

The tax treatment of tokenised securities in Switzerland is fundamentally technology neutral: tokenised instruments are taxed according to the underlying asset (bond, equity, real estate, etc.), not the fact they sit on a DLT. Asset tokens that replicate traditional financial instruments fall under Swiss securities law and associated tax rules. Securities transfer tax (stamp duty) applies to tokenised transfers in the same way as conventional ones when a Swiss securities dealer is involved. However, peer to peer trades between non dealers can fall outside the stamp duty perimeter, which is a structural advantage of on chain secondary markets. Withholding tax (35% on income from Swiss resident issuers) applies equally to tokenised instruments, though smart contracts can automate correct withholding and net distributions, and the 2022 reform that removes withholding tax on many bond interest payments strengthens Switzerland’s position as a digital bond hub. VAT is likewise technology neutral: transfers and issuance of tokenised financial instruments are VAT exempt, while related services (platform, custody, transaction fees) are taxable. Well designed on chain records can also automate parts of the tax calculation and support more accurate reporting.

8. Why Deloitte – The tokenisation opportunity for you and how we deliver it

Deloitte’s Banking and Investment Management Solutions practice brings together expertise in financial regulation, fund law, technology, operations and tax to deliver end to end tokenisation programmes. Our teams have hands on experience with UCITS (Luxembourg/CSSF), US 40 Act frameworks and Swiss CISA/DLT Act regimes. They work with asset managers on UCITS, AIFMD and CISA fund structuring for tokenised share classes, including direct engagement with FINMA, CSSF and the SEC on implementation specific questions. We design KYC/AML frameworks that encode investor eligibility into smart contracts, prepare prospectus and KID/KIID submissions, support transfer agent migration and custodian selection, and advise on stamp duty, withholding tax, VAT and cross border reporting for tokenised issuance and secondary trading.

With properly designed and well governed tokenisation, you can unlock a clear business opportunity to: broaden your investor base, improve liquidity versus traditional locked up structures and reduce frictional and operating costs through automated DLT based processes. Institutions that move early with a clear, compliant and scalable tokenisation strategy will be best positioned to capture these new distribution opportunities, enhance efficiency and shape the next generation of capital markets infrastructure.

Authors

• Daniel Hirs, Partner, Investment Management
• Ueli Preisig, Director, Investment Management Lead Switzerland
• Soheil Modheji, Director, Strategy Risk & Transaction Advisory
• Dr. Tom Burdorf, Consultant, Investment Management