Digital finance is set to gain significant traction as financial institutions increasingly adopt blockchain-based technologies to achieve operational efficiencies and reduce costs. According to a Moody’s Ratings report dated Nov 19, the focus in 2025 will likely be on the tokenisation of real-world assets (RWAs).
However, the broader adoption of RWAs will depend on successful integration with digital currencies and the development of viable use cases. While some traditional financial firms are cautiously expanding their cryptocurrency trading and custody services, a key challenge remains managing the risks inherent to blockchain systems.
One emerging trend is the integration of permissioned networks with permissionless blockchains, where smart contracts enforce permissions at the token level.
This approach has drawn closer scrutiny from regulators, who are working to harmonise industry standards and mitigate risks associated with digital assets. Collaborative efforts such as the Regulated Liability Network (RLN) and Regulated Settlement Network (RSN) aim to establish regulated, interoperable infrastructure for tokenised assets, supported by initiatives like the European Union’s (EU) DLT Pilot Regime and the UK’s Digital Securities Sandbox.
Meanwhile, stablecoins continue to bridge traditional and decentralised finance (DeFi), gaining traction as a payment infrastructure on cryptocurrency networks. Their growing adoption is further bolstered by financial institutions issuing tokenised money market funds, a market where BlackRock and Franklin Templeton hold significant shares. Wholesale central bank digital currencies (CBDCs) are also advancing, with pilot programs facilitating digital bond settlements.
However, the tokenisation of illiquid assets, despite its potential to unlock value, remains sluggish due to regulatory hurdles, fragmented infrastructure, and legal uncertainties.
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The global digital bond market, however, is on a growth trajectory. With issuance volumes in 2024 surpassing the previous year by over 50%, sovereign and financial institutions dominate the sector, complemented by pioneering efforts from corporations like Siemens and Hitachi. Notable transactions, such as Kreditanstalt fuer Wiederaufbau’s EUR100 million ($141.3 million) digital bond, demonstrate the sector’s potential to streamline processes and reduce costs.
Central banks, through wholesale CBDC programs, are further enhancing the settlement of these bonds, signalling a promising future for the market.
Meanwhile, regulatory advancements worldwide are shaping the digital finance landscape. In Asia-Pacific (APAC), Singapore and Hong Kong lead the way with innovative tokenisation efforts and CBDC pilots.
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The EU is implementing its comprehensive Markets in Crypto-Assets (MiCA) regulations, while Dubai’s Virtual Assets Regulatory Authority (VARA) attracts a surge of digital asset operators. In the US, regulatory and legislative progress, particularly around stablecoins, is expected to accelerate.
Despite the progress, blockchain adoption presents challenges, including high costs for mitigating risks in tokenised assets. Emerging hybrid blockchain solutions, which combine public and permissioned networks, are addressing these issues but have also prompted heightened regulatory scrutiny. As technology improves and frameworks evolve, lower costs and better security could make tokenised assets more attractive, encouraging broader adoption in mainstream financial systems.
Projects such as The Depository Trust & Clearing Corporation Sandbox initiative, the Global Layer One Network, and the digital asset platform reflect the global effort to standardise and innovate in digital finance.
As DeFi evolves, so do its technical and environmental considerations. Scaling protocols are optimising security and efficiency, addressing concerns about sustainability while lowering barriers for adoption. With financial inclusion as a growing focus, tokenised assets and decentralised applications are expected to bring more participants into the global economy.
As institutional involvement in cryptocurrencies steadily rises, spot exchange traded funds (ETFs) for Bitcoin and Ethereum have introduced these assets into diversified portfolios, supported by robust regulatory frameworks in regions such as the EU and Singapore. However, concentration risks among service providers remain a concern, highlighting the need for a more decentralised market infrastructure.
With a maturing regulatory landscape, global jurisdictions are prioritising stablecoins, crypto service providers, and CBDCs. In Europe, MiCA is setting the stage for a more standardised approach to digital assets. In the US, legislative clarity could soon provide a much-needed boost to the industry, while APAC nations and the UAE are forging ahead with innovative pilot programs and frameworks, cementing their roles as leaders in digital finance.
