Singapore family office talks up potential of tokenisation
Tokenisation represents the future of finance and offers exciting investment opportunities for long-term investors, according to Singapore-based single family office Evergreen Growth, which has been actively investing in this space.
Tokenisation is the process of representing real-world assets like stocks, bonds, real estate, or commodities as digital tokens on a blockchain.
“Traditional capital market processes like trading settlement and clearing have seen minimal innovation, despite technological advancements in other sectors. Similarly, banking systems are often outdated, creating inefficiencies like lengthy transfer times for international transactions. We see tokenisation as a solution to these issues,” shared Hayden Hughes, head of crypto investments at Evergreen Growth.
Experts suggest that this technology has the potential to streamline trade finance with real-time tracking; reduce securities settlement from days to minutes; and enable faster, cheaper cross-border payments by eliminating intermediaries.
EARLY DAYS
However, many argue that the lack of trust and clear regulations is hindering the adoption of this technology.
According to McKinsey, broad adoption of tokenisation is still far away, given that modernising existing infrastructure is challenging — especially in a regulation-heavy industry such as financial services.
For making investments in this area, Evergreen Growth is looking at tokenisation SaaS (software-as-a-service) platforms that have obtained licences to tokenise traditional assets and are regulated by local regulators.
“We have invested in tokens offered by one such SaaS platform in Singapore, as we believe their approach is truly revolutionary, bringing impressive liquidity to the market,” said Hayden.
“On the issuance side of tokenisation, the platform has all the necessary regulatory approvals,” he added. “On the distribution side, they use Web3 technology to create liquidity pools where token holders can trade their assets, similar to traditional exchanges, but with the added security and transparency of blockchain technology.”
The issuance side of tokenisation involves creating and releasing digital tokens. The distribution side is the process of making these tokens available for trading and investment.
THINKING LONG TERM
The family office is participating in the tokenisation offered by the platform by purchasing utility tokens.
A utility token is a digital asset that provides access to a specific product or service within a blockchain-based ecosystem.
“The utility token doesn't confer ownership, dividends, or represent a basket of assets,” Hayden explained. “Instead, it allows us to participate in the various investment opportunities that the platform offers.”
The platform tokenises and securitises diverse assets, including non-crypto investments like a Korean movie IP, a wine fund, and more traditional Web3 investments such as a Web3 gaming fund.
By investing in its utility token, the family office is participating in these varied investment opportunities without directly owning each asset.
“I can confidently state that for the portion of the liquid book I manage, we have a significant exposure that I'm comfortable with due to the market's liquidity,” noted Hayden.
He believes that the investment offers a high beta to the broader market. For instance, if bitcoin rises by 2%, this asset will likely increase by 4%. The family office is also supporting the underlying success of the platform, through these tokens, thereby providing multiple growth opportunities.
According to McKinsey, total tokenised market capitalisation could reach around $2 trillion by 2030 (excluding cryptocurrencies like Bitcoin and stablecoins like Tether), driven by adoption in mutual funds, bonds and exchange-traded notes (ETN), loans and securitisation, and alternative funds.
Evergreen Growth is long-term invested in this market.
“While we maintain a portion of the portfolio to capitalise on short-term opportunities within the next six months, our primary focus is on the developments expected over the next five to 10 years,” he shared.
COMPLIANCE MATTERS
Given the long term play involved here, the family office also refrains from investing in tokenisation platforms that have become overnight sensations.
“We focus on platforms that are compliant and regulatory-safe and have founders with a strong commitment and a long-term vision,” noted Hayden.
Understanding where the founding team is on its compliance journey with the tokenisation platform is crucial for the family office.
In regulatory strategy, tokenisation platforms typically choose between full compliance, where they adhere rigorously to regulations even if it means excluding investors of certain countries; minimum viable compliance, operating in jurisdictions with lenient rules and meeting basic legal requirements; or taking risks with minimal compliance, aiming to navigate regulations with less oversight and potential consequences.
Each approach has distinct implications for market access and operational strategy.
“Maximum compliance may be the hardest path, but can be the easiest to discuss with serious investors. We prefer those with robust regulatory strategies, ensuring they can thrive in the long term,” said Hayden.