Tokenisation is slowly reshaping the asset management landscape, particularly in money market funds (MMFs). This means the road to 2030 is beginning to take form. While the technology underpinning tokenisation is no longer experimental, its integration into the everyday machinery of fund management remains uneven. Critics would say it is hampered by legacy systems, entrenched operational models, and a steep investment curve.
Despite its early billing as a cost cutting revolution, tokenisation has yet to deliver on that promise across the full value chain. The theoretical savings exist, but practical realities have slowed their arrival.
Simon Keefe of Calastone said that while the technologies and models are “absolutely there” to make it happen, the efficiencies haven’t materialised across the board. Calastone – after investing heavily in backend infrastructure and processes in order to increase efficiencies for market actors – realised that tokenisation’s distribution potential was more important for its asset-manager clients.
The firm recently launched Calastone Tokenised Distribution – a “pioneering” solution that allows asset managers to tokenise any fund operating on Calastone’s network and distribute it seamlessly across blockchain-based channels. Yet delivering cheaper products for investors requires more than digitising distribution, said Keefe. It demands “rethinking how a fund is constructed from the ground up”.
The expense ratio of a fund remains stubbornly complex. Keefe estimates that an average fund carries about 74 basis points in costs and that – according to Calastone’s research – this will grow by 32% over the next three years. The costs – many of which are embedded within the asset manager’s internal operations – are not all being passed on to the investor, he said, but the costs are real, and they’re high. The goal is to cut that figure by half, but that involves unwinding years of accumulated operational complexity.
Calastone’s research – called ‘‘Decoding the economics of tokenisation: Transforming cost dynamics in asset management’ – found that with tokenisation and the deployment of distributed ledger technology (DLT), asset managers could achieve savings of 23% in operating costs, equivalent to 0.13% of assets under management.
For Anna Matson of Northern Trust, the core value of tokenisation is data transparency and the enablement of firms to offer new capabilities, not just costs savings. She argued that the narrative around efficiency may be overplayed and added: “What’s more important now is what value you can add. What is it that can you embed that you couldn’t do before?”.
It’s not a cost play
Still, cost pressure is very real, particularly given the fee compression that the whole industry “struggles” with, said Kim Hochfeld of State Street Global Advisors. Yet she stressed that for buyside firms, tokenisation is not primarily about slashing expenses.
“We’re not seeing this as a cost play. This is about flow and future AUM.” That doesn’t mean the cost component is irrelevant. It’s just that the expensive pieces lie with infrastructure providers, not the asset managers themselves. “We don’t need to develop digital custody or digital fund admin. This is something our service providers will handle. The initial cost to develop these capabilities can be high.”
This has naturally shifted the dynamic in how firms select providers. Selection of fund administrators and custodians could now include a heavy emphasis on digital capabilities, albeit Hochfeld said that “until there is enough tokenised product, the digital piece is not yet important enough”. But it will be.
Layer on layer of infrastructure
The dual infrastructure model – where firms run both traditional and digital systems in parallel – is another reason cost savings have yet to take hold.
Thomas Eichenberger of Sygnum Bank noted the irony. “You may be managing your fund units as a token, but you’re still administering the fund on legacy infrastructure. You’re adding an additional layer instead of replacing one!” He believes that only once legacy infrastructure is truly retired will tokenisation yield the efficiencies it’s meant to deliver.
Calastone’s Simon Keefe adds that many systems in use today wouldn’t make sense if designed from scratch with current technologies. “You’d look at it and go, ‘Oh my God, what’s that?’”
He said that years of regulation and piecemeal fixes have created an ecosystem that’s functional but far from optimal. However, he also pointed out additional findings from Calastone’s research that show how tokenisation and DLT could optimise the industry, even as it stands today.
Along with the 23% savings in operational costs, the average fund today could deliver a total P&L improvement of between $3.1 million and $7.9 million through tokenisation. This includes revenue estimated at $1.4 million to $4.2 million per fund based on more competitive total expense ratios.
Industry-wide, asset management could achieve aggregate savings of $135.3 billion across Ucits, UK and US (40 Act) funds, Keefe said.
Achieving this is not just a technical challenge today, as much as it is a cultural and organisational challenge. Keefe points to Singapore as an example of a jurisdiction moving decisively. “They’re doing this because they haven’t got the legacy infrastructure.” In contrast, the UK risks stagnation unless it fully commits to digital transformation.
“If UK plc wants to be a leader in the digital space and continue to be a leader in asset management, it needs to be really careful,” he said. This is where initiatives like the UK’s Digital Securities Sandbox launched by the Bank of England and Financial Conduct Authority – are seen as crucial. John Allan, of The Investment Association, believes it can help the industry move toward standards and interoperability, allowing for the kind of economies of scale that could make tokenisation truly transformative. “It’s not just about gilt issuance—it’s about other digital securities we’ll see through that sandbox.”
But other jurisdictions are not waiting. Switzerland, the UAE, and Singapore are pushing forward with integrated digital capital markets, sometimes drawing talent away from more conservative financial centres. “There will be a drain of talent from the UK pretty quickly over the next few years,” warned Calastone’s Keefe.
As 2030 approaches, asset managers face a landscape where tokenisation is no longer a novelty but is also not yet fully mainstream. Real cost reductions and infrastructure gains remain aspirational for many, but the strategic direction is clear: outsourcing, jurisdictional agility, and technological readiness will increasingly define who thrives in this next phase – and who risks being left behind.
From technology to trust
As the Funds Europe discussion drew to a close, participants turned their attention to the future of tokenised funds and what will be required for institutional investors to engage more fully. For now, many remain cautious – not necessarily about the concept of tokenisation itself, but about the practical, operational and regulatory realities that surround it. From the perspective of safekeeping of assets, the message was clear: institutional investors expect the same rigorous standards they already rely on, regardless of the technology layer.
“Investors don’t want to access different platforms to see different sets of information,” said Anna Matson of Northern Trust. “They want one view.” For custodians, then, the challenge lies in integrating new digital capabilities into their traditional frameworks without compromising security or simplicity. While new technologies may introduce new risks, speakers emphasised that these technologies also offer the potential for greater security and resilience, if implemented correctly. This includes alignment with existing risk and governance protocols. “It’s not about reinventing everything,” one speaker noted. “It’s about marrying digital innovation with what’s already trusted.”
The panellists also drew attention to concerns around product integrity particularly the rise of unregulated offerings mislabelled as money market funds. “We’ve seen products being marketed as tokenised MMFs that are not regulated money market funds at all,” said Veronica Iommi of the Institutional Money Market Funds Association. The message was firm: proper legal and regulatory definitions matter and must be upheld to protect investors and preserve trust.
Yet despite these hurdles, there is clear optimism. Tokenisation is not simply a technological upgrade – it is also an opportunity to reimagine aspects of the industry, from cost reduction to access to collateral optimisation. The promise of delivering better value, reaching new demographics, and facilitating innovative use cases – like MMFs as settlement instruments or collateral – is driving further interest.
However, real adoption will depend on meaningful change: not just layering new tools on top of legacy systems, but reengineering infrastructure for a digital future. “Tokenisation must become the base layer, not the addon,” said one speaker. Another stressed that the winners will be those who can “bridge traditional and digital infrastructures seamlessly.”
In the short term, 2024 has been described as a year of entry, marked by experimentation and cautious first steps.
But 2025, said the panel, must be about scale: scaling adoption, lowering costs, building confidence, and delivering on the true potential of tokenisation. As the conversation closed, a final insight pointed towards the convergence of technology and market forces: new investors with new expectations, a search for efficiency, and the expanding scope of what tokenised instruments – especially money market funds – can do. If custody, compliance and clarity can keep pace, then the evolution of tokenised finance will not only continue but accelerate.
(Originally published in Funds Europe, June 2025)
