Trade finance assets poised for tokenisation: StanChart

Trade finance could make up 16% of the estimated $30.1t market.

Trade finance assets could become one of the top three tokenised assets globally by 2034, according to a new paper published by Standard Chartered and Synpulse.

Trade finance assets are predicted to make up 16% of the $30.1t of global tokenised assets estimated to exist by 2034. 

This comes as global trade is expected to grow to $32.6t globally by 2030, combined with growing industry digitalisation and the specific features of real-world trade finance assets. These factors make trade finance an ideal category to originate tokens, according to Standard Chartered and Synpulse.

Trade finance assets are underinvested despite its attractiveness as an opportunity to diversify risk, StanChart and Synpulse noted in a press release. Tokenisation reportedly holds the potential to address these challenges. 

“Digital representations of real or traditional assets in the form of a token, or distributed ledger, enable operational efficiency and automation, with the most critical benefits being their ability to deliver enhanced access to new asset classes and improved financial market infrastructure – opening doors to innovative applications in decentralised finance (DeFi) and new business models,” the press release stated.

Tokenisation also holds the potential to tackle the $2.5t global trade finance gap, it added.

“We see the next three years as a critical junction for tokenisation, with trade finance assets coming to the fore as a new asset class,” said Kai Fehr, Global Head of Trade, Standard Chartered. 

“To unlock this trillion-dollar opportunity, industry-wide collaboration among all stakeholders, from  nvestors and financial institutions to governments and regulators is critical,” Fehr said.

Synpulse Group CEO and managing partner Yves Roesti noted that banks would need to take the role of bridging the traditional financial markets with the open token-enabled market infrastructure.

“By leveraging tokenisation’s inherent efficiencies and transparency, we can unlock a future where the “missing middle” gains access to vital capital, investors benefit from a diversified asset class, and the global trade economy thrives,” Roesti said.