Key takeaways from the Abu Dhabi Finance Week panel dialog in December.
At Abu Dhabi Finance Week 2025, conversations on capital effectivity persistently returned to the identical query – whether or not at the moment’s market infrastructure is definitely constructed to assist it.
On a panel targeted on constructing the rails for tokenized leverage, Redwan Meslem, Government Director of the Enterprise Ethereum Alliance, joined leaders from insurance coverage, clearing, custody, and buying and selling to unpack what’s actually standing between tokenized collateral and institutional-scale adoption.
The dialog shortly moved previous whether or not tokenization issues, and as an alternative targeted on how, the place, and below what constraints it could possibly be built-in into leverage, credit score, and liquidity frameworks.
Tokenized collateral is greater than a technical query, it’s a techniques query
Throughout insurance coverage underwriting, CCPs, and custodianship, panelists converged on one actuality: collateral lives on the intersection of danger administration, authorized certainty, and operational management.
From an insurance coverage perspective, tokenized property face speedy scrutiny on 4 fronts: stability, authorized readability, transparency, and regulatory acceptance. Even with a whole lot of billions deployed globally as fiat collateral, crypto-based collateral stays marginal – not due to liquidity constraints, however as a result of regulators nonetheless lack confidence in enforceability, valuation requirements, and custody fashions.
Clearing and derivatives infrastructure echoed this view. Central counterparties don’t consider collateral via a “crypto vs. TradFi” lens, they consider whether or not property might be valued reliably, apportioned per account, mobilized 24/7, and liquidated with out introducing systemic danger.
Tokenization, on this context, is about shortening settlement cycles and decreasing counterparty publicity in markets that already function across the clock.
Management issues as a lot as possession
Custody introduced the dialogue into sharper focus. Authorized title alone doesn’t make an asset usable as collateral if management can’t be exercised in actual time.
Andrej Majcen of Bitcoin Suisse captured the custody problem succinctly: “Not your keys, not your cash.” When collateral values transfer shortly, the power to behave immediately issues, and sophisticated custody or authorization constructions can undermine enforceability when it’s wanted most.
That is the place tokenized property face their first actual institutional stress take a look at not in issuance, however in enforcement below stress.
Interoperability is the true unlock
When the dialog turned to interoperability, Redwan’s perspective was clear: tokenization with out connectivity merely recreates the silos of legacy finance, on-chain.
“There’s no technical downside we are able to’t resolve,” he famous, however interoperability solely creates worth if it allows capital velocity, not fragmentation. Tokenized property should be capable to transfer throughout venues, talk with present techniques, and stay composable throughout clearing, settlement, and collateral administration workflows.
Requirements are starting to emerge – together with ERC-based frameworks gaining traction for compliant tokenization – however Redwan emphasised that requirements alone aren’t sufficient. The actual work occurs when technical design is knowledgeable by enterprise actuality.
Too usually, crypto conversations, particularly institutional ones, stay engineering-first. Institutional adoption, against this, requires translating these requirements into language danger committees, compliance groups, and treasury departments can act on.
Regulation: equivalence over innovation
Probably the most understated, but important, insights from the panel was the position of regulatory equivalence.
International markets operate as a result of jurisdictions acknowledge one another’s regulatory regimes as comparable. Tokenized collateral is not going to scale globally except comparable equivalence emerges, not simply between nations, however between forms of establishments. Banks have lengthy acted as trusted collateral intermediaries. Token-native custodians should ultimately be acknowledged as bearing comparable fiduciary, compliance, and supervisory requirements for regulators to grow to be comfy.
“Having parity and recognizable equal regimes could be very paramount”, stated Sabrina Wilson of GFOX, underscoring that regulatory equivalence, not novelty, is what permits world markets to operate at scale.
That theme was strengthened from the insurance coverage facet by Helen Ye, CEO of Qubit Underwriting, who pointed to a unique – however associated – hole: “How can we even have the equivalently regulated entity as credible as banks… so regulators will say, ‘Sure, we truly settle for that’?”
From Europe’s MiCA framework to regional experimentation within the Center East, regulatory certainty, even when imperfect, is proving extra catalytic than regulatory silence.
From “in code we belief” to institutional belief
Redwan closed with a framing that resonated strongly with the monetary viewers: “In code we belief” just isn’t enough when techniques contact the true economic system.
Ethereum and the broader ecosystem are not of their infancy. Privateness-preserving requirements, interoperability frameworks, and enterprise-grade tooling are maturing shortly, however progress is dependent upon sustained dialogue between builders and establishments, not parallel conversations.
The way forward for tokenized collateral is not going to be determined by a single protocol or jurisdiction. Will probably be formed by how successfully requirements, regulation, and infrastructure converge round shared danger fashions.
Wanting towards 2030
By the top of the session, the panel aligned on a practical outlook. Tokenized collateral is unlikely to exchange conventional techniques in a single day. As an alternative, it would grow to be one other more and more essential device inside institutional toolkits.
The actual transformation lies in velocity: quicker settlement, decreased counterparty danger, and extra environment friendly use of capital throughout markets. If these advantages materialize, tokenization will transcend merely modernising collateral – it would quietly redefine how leverage, credit score, and liquidity are structured throughout the monetary system.
And as Redwan prompt, as soon as interoperability and belief are in place, the vary of property that may take part might develop far past at the moment’s creativeness – from monetary devices to real-world worth itself!