From conception to implementation: how will tokenisation shape Australia’s financial system?

Tokenisation broadly refers to the representation of a real world asset as a digital token through distributed ledger technology (DLT), most commonly blockchains, where holding the digital token entitles the holder to certain rights in or claims to the underlying asset (eg ownership).

Developments in tokenisation in recent years, both in Australia and overseas jurisdictions, mean that it is no longer a question of if tokenisation will have a role in financial systems. The value and technical feasibility of the technology have largely been settled, institutional and regulatory engagement is building and a tokenised future (at least in part) seems inevitable. Instead, the questions being asked by industry participants, governments and regulators are now focusing on how and when tokenisation is to be practically implemented.

Why are people talking about it?

One of the key propositions of tokenisation is that it reduces the need for manual intervention and automates processes in the lifecycle of an asset (issuance, servicing, trading and settlement), therefore reducing transaction costs, timeframes and counterparty risk. In the long-term, these improvements to efficiency can potentially lead to increased trading activity, deeper liquidity and broader market participation.

According to estimates from the Digital Finance Cooperative Research Centre (DFCRC),1 digital finance innovations, which include DLT, tokenisation and smart contracts (automated, self-executing contracts on a blockchain), are expected to generate around AU$1 billion per annum in economic gains by 2030. This is based on current tokenisation rates which assume that around 4% of real world assets will be tokenised by that time. If full-scale adoption is achieved, however, the economic gains in Australia could be up to AU$24 billion per annum. On a global scale, the estimate exceeds US$2.7 trillion (approximately AU$3.8 trillion) per annum.

What is happening around the world?

Globally, money has been one of the most active areas of tokenisation, with the stablecoin market (digital tokens that seek to maintain a stable value relative to an asset eg a fiat currency) at the forefront. According to a June 2026 report prepared by the DFCRC for the Australian Securities & Investments Commission (ASIC) (Report 835),2 the value of the global stablecoin market was estimated to have reached US$307 billion in 2026, with over 90% of the market being made up of US-dollar pegged stablecoins. Annual on-chain activity of stablecoins was also estimated to be as much as US$35 trillion. The DFCRC suggests that such growth was accelerated by law reforms around the world, such as the US’s GENIUS Act and the EU’s MiCA regulation, which have made the regulatory implications of issuing and transacting in stablecoins in such jurisdictions clearer. Other jurisdictions are following: Hong Kong and Canada have legislated, the UK’s regime takes full effect in October 2027 and Switzerland is consulting on a new licence for stablecoin issuers.

Activity in relation to the tokenisation of financial instruments has also been building around the world. Report 835 indicates that the more active instruments have been fixed income products, and in particular, bonds (with bonds representing a total value of approximately US$8 billion having been issued by mid-2025), money market funds (reaching approximately US$16 billion in outstanding issuances as of May 2026) and repos or repurchase agreements.

Although more limited, momentum in tokenising cash equities has also been gradually building. In September 2026, the US Securities and Exchange Commission granted a five year exemption allowing tokenised versions of US-listed shares to trade on qualifying blockchain-based platforms (referred to as Tokenized Securities Venues). Traditional exchanges in the US are also moving to provide some of the benefits offered by tokenisation through their established markets. In keeping with today’s “always-on economy”, exchanges such as the Nasdaq are proposing to expand trading hours to 23 hours a day, five days a week, from December 2026 (subject to regulatory approval).3 We are also at the beginning of a potential convergence of the roles of traditional stock exchanges and crypto exchanges, with traditional exchanges in the US filing proposals to list tokenised equities and exchange-traded products, while centralised crypto exchanges are offering tokenised versions of equities and exchange-traded products.

What has Australia put in place?

In Australia, a small number of licensed stablecoins are already in public circulation. In June 2026, the four major Australian banks were also announced as one of the official partners of Open USD, a US dollar stablecoin issued by an independent company and governed by a board drawn from its founding partners (Coinbase, Mastercard, Shopify, Stripe and Visa).

Otherwise, tokenisation largely remains in a pre-implementation stage in Australia. Some recent developments include:

• Updated ASIC guidance on digital assets: In October 2025, ASIC updated its guidance on the regulation of digital assets (digital tokens being a form of digital asset) under the Australian financial services (AFS) regime. The updates clarify that whether a digital asset, or an arrangement involving a digital asset, is a financial product under the AFS regime is to be informed by the rights and benefits attached to the digital asset or broader arrangement.4
• DAP and TCP regulation: In April 2026, laws coming into effect on 8 April 2027 were passed to introduce two new forms of financial product: the digital asset platform (a facility through which a person possesses one or more digital tokens on behalf of another person or their nominee) and the tokenised custody platform (a facility through which a person creates a digital token and holds the underlying asset on trust for, or on behalf of, a person who possesses the digital token). Once the laws are in effect, any person offering these services will generally require an AFS licence and be subject to other obligations under the AFS regime, unless an exemption otherwise applies. On 15 October 2026, ASIC commenced consultation on proposed standards for implementation of these new laws and its guidance in relation to compliance with them.
• Upcoming reforms to payments licensing framework: The Australian Government is in the process of reforming the payments licensing laws in Australia. Among other things, the reforms are proposing to regulate stablecoins as a new class of financial product, a “tokenised stored value facility”, and introduce tailored obligations for their issuers.5
• Project Acacia: In May 2026, the Reserve Bank of Australia (RBA) and the DFCRC released their final report on Project Acacia, an experimental research project which involved industry participants testing 12 pilot use cases (using real money and real asset transactions) and 8 proof-of-concept cases (involving simulated transactions) of tokenisation in Australia. Among other things, Project Acacia revealed that, consistent with overseas trends, interest in Australia is growing in relation to tokenised fixed income and related assets (in particular, government bonds) and tokenised private money (in particular, stablecoins and tokenised deposits).
• Upcoming initiatives: Post-Project Acacia, the RBA will be continuing to pursue tokenisation initiatives in Australia, including (among other things) the exploration of a new digital financial market infrastructure sandbox with ASIC and the DFCRC, the exploration of opportunities in relation to tokenised government bonds, further work into a wholesale CBDC and continued industry engagement.

What is coming next?

A common finding of Blockchain APAC’s recent National Dialogue6 appears to be that tokenised money is a key missing component and enabler of Australia’s emerging digital assets market.

There are two fundamental components of a transaction: the underlying asset being transacted, and the value or money required to settle that transaction. Either or both components may be tokenised, meaning that tokenised money could be used to settle the transfer of both a tokenised asset as well as non-tokenised property. The relative simplicity of tokenised money (as opposed to, for example, tokenised equity), and its use case in both tokenised and non-tokenised transactions, could assist to bridge the conceptual gap between traditional finance and decentralised finance.

Given the strength of Australia’s domestic payment rails, many National Dialogue industry participants consider that the tokenised money opportunity is more likely to be cross-border than domestic. Not only could tokenised money deliver the efficiency benefits as discussed above (which are likely to be greater in a cross-border transaction), it would also allow for the settlement leg of a transaction or a financing arrangement to be denominated in Australian dollars (rather than in a foreign currency).

As mentioned above, the Australian Government is in the process of reforming its payments licensing laws, which should provide greater regulatory clarity for institutions and businesses looking to transact in stablecoins with clients in Australia.

The bottom line

Tokenisation will not replace the financial system and, while for most businesses there is no pressing decision to be made, the rules are being written and the infrastructure is being built now. Organisations that understand where tokenisation fits, and where it does not, will be well placed when it reaches them and their industries.

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