The Gulf’s push to modernise financial markets is recasting tokenisation from a crypto-adjacent concept into a core piece of capital markets infrastructure, as regulators and institutions shift focus toward efficiency, liquidity and access.
Industry executives say the conversation in the UAE and Saudi Arabia has evolved markedly in recent years, moving away from questions around speculative value toward practical applications within regulated finance. “Several years ago the discussion centered on whether digital tokens held intrinsic value,” said Adam Popat, CEO of SettleMint, adding that the region is now focused on “improving how existing capital markets settle, custody and transfer assets with greater speed and lower cost.”
That shift, he said, has been underpinned by regulatory clarity, with frameworks such as those in Abu Dhabi Global Market giving institutions the confidence to treat tokenisation as part of mainstream market infrastructure rather than a parallel system.
Tokenisation itself is often misunderstood, according to Andrew Forson, President of DeFi Technologies, who stressed that it should be seen as a technological layer rather than a speculative asset class. “Tokenisation is not crypto,” he said. “Tokenisation is merely the digital representation of securities and other assets on chain,” enabling greater liquidity and transferability in global finance.
That distinction is central to why Gulf markets are increasingly embracing the concept. Governments and financial institutions are exploring how blockchain-based rails can streamline legacy processes, particularly in areas where capital is tied up in slow settlement cycles or constrained by fragmented market access.
Among the potential use cases, both executives point to fixed income as the most immediate candidate for scale, though their emphasis differs slightly. Popat argued that sovereign and institutional debt is likely to lead because of its standardisation and the measurable cost efficiencies that tokenisation can deliver from the outset.
Forson similarly highlighted exchange-traded instruments — including debt, equities and commodities — as the most viable early applications, noting that “the more liquid the underlying asset the more likely the success and adoption of the tokenised instrument.”
Real estate, a sector that has drawn strong investor interest across the GCC, is also emerging as a key use case, though both executives suggest it may take longer to scale. While Forson described strong supply-side interest in property tokenisation, Popat cautioned that its growth depends on the alignment of title registration and legal frameworks.
Beyond asset classes, the appeal of tokenisation lies in the potential to improve market efficiency. One of the most immediate gains is in settlement, where distributed ledger technology can compress multi-day clearing cycles into near real-time execution. “A tokenised asset allows that process to move toward near real-time settlement against a single shared record,” said Popat, noting that this frees up capital otherwise locked during the clearing process.
Liquidity is another potential upside. By enabling fractional ownership and broader participation, tokenisation could expand the investor base for assets that have traditionally been difficult to trade. Forson pointed to the current “silo effect” in markets, where assets can only be traded within specific platforms, limiting visibility and liquidity, and argued that wider transferability will be key to unlocking full market potential.
However, both executives caution that realising these benefits depends less on the underlying technology—which they say is already mature—and more on the surrounding ecosystem. This includes custody, trading venues and lifecycle management systems capable of supporting assets from issuance through to redemption.
“The chains and token standards have reached genuine maturity,” said Adam Popat, but the remaining challenge lies in building the “connective tissue of the market,” including regulated custody and secondary trading venues with sufficient depth.
Andrew Forson echoed that view, identifying regulatory onboarding processes such as KYC and AML as key bottlenecks that continue to limit seamless transferability across platforms.
As tokenisation moves closer to the financial mainstream, risks are also coming into focus. Popat warned of potential fragmentation if different platforms and issuers develop incompatible systems, which could recreate the very inefficiencies the technology seeks to eliminate. He also highlighted the need to ensure that regulatory oversight keeps pace with innovation and that liquidity expectations remain grounded in market realities.
Forson, meanwhile, pointed to more technical and structural risks, including the possibility that tokenised sovereign debt may not be recognised as collateral under existing regulatory and accounting frameworks — an issue that could limit its use in repo markets. He also stressed the importance of robust pricing mechanisms, warning that weak valuation frameworks could lead to forced selling in periods of low liquidity.
Taken together, the views highlight a region moving beyond pilot projects toward real-world deployment, where the success of tokenisation will hinge not just on technological capability but on integration with existing financial systems and regulatory discipline.
