Finding Clarity Amidst Crisis: Investing in Tokenised Fixed Income Markets

Over the past few weeks, markets have witnessed volatility across asset classes, gold has continued to rise, and uncertainty, in general, is at its highest point in years.

Traditionally, bonds, especially treasuries, have been the primary go-to safe havens in turbulent times. However, the fixed income markets as we know them haven’t always been easy to access, nor have they been the absolute safe haven of previous years, given the current market uncertainties. High entry thresholds, lack of liquidity and opaque structures have kept many everyday investors on the sidelines. However, this is starting to change.

Amidst the chaos, tokenised fixed yield and fixed income assets are bucking the trend to offer investors clarity at a time of confusion, at least those that are aware of the nascent asset class.

Why Tokenise Fixed Income Assets?

Tokenised bonds are digital representations of traditional bonds, issued and managed on blockchain infrastructure. These bonds retain all traditional bond characteristics, such as principal, interest rate and maturity date, while leveraging blockchain technology to ensure security, transparency and efficiency for investors.

For instance, there are tokens in the market that invest in short-term US Treasury Bills which, although not offering a fixed yield, have notably been less affected by the current market turmoil. In fact, the total market cap of tokenised US Treasuries as at 1 April 2025 was $5.12 billion – as at 06 May 2025, the figure now sits at $6.59 billion, representing a 29% increase despite the tariff saga.

These tokens can attract investors who may typically struggle to access US Treasuries directly due to geographical restrictions. With low minimum tickets to invest in the primary market, retail and institutional investors alike can often access, and even trade on secondary markets, these assets.

Meanwhile, small- to mid-sized governments and businesses are issuing tokenised securities that are accessible to all types of investors, offering coupons with returns ranging from 8% to 15% with typically sub-five-year maturities.

Tokenised assets are recorded on a blockchain – a secure ledger housed across multiple computer networks – which allows investors to verify ownership, payment history and asset performance in real time. This level of transparency reduces information asymmetry, which is often a key driver of fear and volatility for investors in murky markets. Additionally, the disintermediation ensures that investors seeking to re-allocate their capital can do so through instant settlement or trading on liquid secondary markets, which can be critical during times of market flux.

Blockchain technology also ensures immutable records of ownership which reduces counterparty risk, especially during periods of stress when traditional intermediaries may become unreliable. Smart contracts also facilitate automatic interest payments and redemptions, lowering the risk of delayed or failed settlements for investors.

Tokenisation not only disintermediates technologically unnecessary counterparties but also allows investors to have more control. As the industry grows and assets are cross-listed across platforms, investors will be able to withdraw their bonds, send them to other exchanges for arbitrage, self-custody them, and even trade them peer-to-peer within whitelisted ecosystems.

Challenging Legacy Markets and Financial Institutions

We are clearly in a time of significant change for markets, geopolitics, and more. Looking at the broader picture, blockchain technology and, by extension, tokenisation is the first genuine opportunities we have had in generations to rethink finance and do things differently.

Many regulators worldwide have adopted a progressive stance towards tokenisation. Some of the most forward-thinking approaches are emerging from small- to mid-sized economies, such as El Salvador and Kazakhstan, where pushback from layers of technologically obsolete intermediaries is less influential. These economies are enabling innovative governments and companies to issue fixed-yield assets that offer investors an alternative to the norm which, under current circumstances, is fuelled by policy uncertainty and market volatility.

Tokenised bonds bring a traditional safe haven into the digital age through improved accessibility, efficiency, and transparency.

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