The convergence of blockchain technology with traditional financial markets is no longer speculative – it is a structural shift redefining how investors access, trade and interact with listed securities.
In South Africa, this transformation is already underway, with cryptocurrency exchanges offering tokenised versions of foreign-listed shares. This signals a broader global movement towards more inclusive and efficient capital markets.
As tokenisation matures, virtual asset service providers and blockchain infrastructure are poised to challenge the dominance of traditional platforms used to access locally listed investment products. Tokenisation refers to the creation of a blockchain-based digital asset that mirrors the economic exposure of a traditional security.
Unlike cryptocurrencies such as Bitcoin, which derive value from fixed supply, decentralised consensus, network security and their role as a store of value, tokenised securities are backed by real-world assets.
This distinction is critical for traditional investors who often struggle to reconcile the abstract and technological value of crypto with the tangible fundamentals of equity markets.
Beyond digitisation, tokenisation represents a reimagining of market infrastructure. It streamlines settlement, reduces barriers to entry and expands access to global investment opportunities. Blockchain technology has become the catalyst for what will be known as the digital economy, a defining feature of the Fourth Industrial Revolution.
How tokenisation works
Tokenisation typically involves a structured vehicle, such as a special-purpose entity, acquiring the underlying shares from a regulated exchange or broker. These shares are held in custody with a traditional financial institution. The sole function of the vehicle is to hold the asset and issue a corresponding digital representation of the asset in the form of a token on a blockchain.
Efficiency and cost reduction
The benefits of tokenised securities are compelling. Settlement times are reduced from T+2 or T+1 to near-instantaneous T+0. Trading becomes a 24/7 activity, unconstrained by market hours. Fractional ownership allows broader participation and the reliance on intermediaries – brokers, custodians, clearing houses – is significantly diminished. This leads to a reduction in settlement and transactional costs, making capital markets more efficient and accessible.
Smart contracts on blockchains introduce programmable money – self-executing logic that automates financial processes. This opens the door to innovations, such as AI-managed portfolios that rebalance dynamically and real-time dividend distribution. The fusion of tokenisation and smart contracts is laying the foundation for a more intelligent financial system.
South African investment dynamics
Natural persons can gain exposure to foreign shares through their single discretionary or foreign investment allowances. However, non-natural persons, such as trusts, face more stringent requirements, often needing to implement complex structures to access offshore investments. Tokenised securities offer a potential solution. By acquiring digital representations of foreign assets through local crypto asset service providers, these entities can gain exposure without engaging in traditional cross-border investment processes. This opens new avenues for portfolio diversification and strategic asset allocation.
Global momentum
The rise of tokenised securities is closely tied to the adoption of stablecoins, which are increasingly used as settlement assets in digital financial ecosystems. In 2024, stablecoin transaction volumes exceeded those of Visa and Mastercard combined, reaching $27.6-trillion – a clear signal of blockchain’s scalability.
Regulatory developments such as the US GENIUS Act and the EU’s MiCA framework are accelerating institutional interest in blockchain-based financial instruments. A key milestone in this evolution is Nasdaq’s proposal to enable dual trading of traditional and tokenised shares, allowing the same security to be traded in both conventional and blockchain-native formats. This model preserves investor protections while introducing blockchain-based settlement and programmability, signalling a shift toward mainstream adoption of tokenised securities.
Looking ahead
As regulatory frameworks evolve and infrastructure matures, tokenised securities will likely become a cornerstone of modern portfolio construction. South Africa has an opportunity to lead in this space, provided regulators and market participants embrace innovation responsibly. The digital economy is here, and tokenisation is its foundation.
