Key Insights
- Tokenization is no longer theoretical—firms are actively piloting and planning production use cases for collateral mobility and liquidity optimization.
- Regulatory clarity and legal enforceability remain critical hurdles, but global task forces and sandbox pilots are accelerating progress.
- Cloud, blockchain and AI are converging to enable real-time collateral management and operational resilience.
- Collaboration across jurisdictions and industry groups is essential to define standards and scale adoption.
Collateral management is at a pivotal inflection point. Rising margin requirements, post-trade fragmentation and capital efficiency pressures are all driving tokenization innovation to accelerate from concept to real-world use cases.
Tokenization can allow firms to optimize collateral management and reduce risk—but success depends on harmonizing technology, regulations and market practice. Shared best practices and industry collaboration will be essential.
These themes were explored during ISDA’s recent webinar “Continuing the Conversation on Tokenized Collateral” that gathered industry experts including:
- Amy Caruso, Head of Collateral Initiatives, ISDA
- Sophie Marnhier-Foy, Vice President and Head of Client Solutions Strategy, Nasdaq
- Sam Edwards, Managing Director and Head of Alpha Collateral Services, State Street
- John Siena, Associate General Counsel and Co-Head of Regulatory Strategy, Brown Brothers Harriman (BBH)
Watch a recording of the webinar here and read the key takeaways from the conversation below.
Strategic Imperative: From Fragmentation to Digital Integration
Moderator Amy Caruso opened the discussion by framing the complexity of today’s collateral ecosystem. She highlighted that optimization is no longer about selecting the cheapest-to-deliver asset—it’s about orchestrating a dynamic process that spans derivatives, repo markets and securities lending, all while navigating inconsistent eligibility schedules and regulatory requirements.
“This is not the world of pick the cheapest collateral to deliver and set it and forget it. There is more pressure to get the right collateral to the right place at the right time.”
Caruso positioned tokenization as more than a technology upgrade—it’s a strategic response to structural inefficiencies. By enabling real-time mobility and reducing friction across fragmented workflows, tokenization can transform collateral management from a reactive process into a proactive liquidity strategy.
Takeaway #1: Technology as a Catalyst for Efficiency
Technology is the obvious enabler of tokenization. But in terms of transformation, the onus is shifting to market participants to explore and adopt the right technologies for their strategic and business use cases. Drivers include cost optimization, intraday liquidity and the ability to bridge traditional and decentralized finance.
Sophie Marnhier-Foy expanded on the technology pillars underpinning this shift:
- Cloud hosting, which provides scalable infrastructure and managed services for optimization.
- Blockchain, which enables real-time settlement and consolidated inventory management.
- Artificial intelligence (AI), which can be leveraged to orchestrate workflows, ultimately allowing predictive allocation and automation for continuous operations.
Sam Edwards pointed to tokenized money market funds as a practical example, noting their potential to reduce friction and unlock operational mobility. He stressed that the costs of not acting (not only the hard costs but also the opportunity costs of not innovating) are rising as funding pressures increase.
“The cost of not optimizing … is increasing. Whether rates are going up or down, the net cost to the business is increasing.”
Takeaway #2: Regulatory Progress and Remaining Gaps
Together, these technologies are redefining what collateral management can achieve, from batched, overnight processes to real-time execution.
Regulation remains a critical factor in scaling tokenization. John Siena outlined recent developments, including U.S. legislation focused on digital assets and stablecoins, UK consultations on tokenized funds and global efforts to harmonize legal frameworks.
While there is progress, challenges persist. Legal enforceability of smart contracts, clarity on property rights and interoperability standards are still evolving. Siena stressed that legal certainty is non-negotiable to scaling operational innovation, but the industry is pointed in the right direction.
"We've moved from the 'unknown unknowns' to 'known unknowns.'"
The takeaway: regulatory engagement is accelerating, but firms must stay close to these developments and prepare for incremental change rather than a single “big bang” moment.
Takeaway #3: From Pilots to Production—Proof Points Emerge
The conversation also highlighted tangible progress in tokenization projects, representing the pipeline of ideas to action. Marnhier-Foy showcased a recent Nasdaq pilot with QCP, Primrose Capital Management and Digital Asset. Nasdaq Calypso connected with the Canton Network to facilitate end-to-end margin and collateral workflows, demonstrating end-to-end orchestration across blockchain and traditional rails.
This proof of concept validated that tokenized assets can be managed within existing systems without compromising resilience. It also underscored the importance of interoperability and governance frameworks for scaling adoption.
“We proved that you can merge the two worlds of TradFi and Defi in a trusted, STP environment. That’s the foundation for scaling tokenized collateral.”
Sandbox initiatives and industry working groups are playing a pivotal role in shaping best practices and accelerating readiness.
Takeaway #4: Collaboration as the Catalyst for Scale
Scaling tokenization is going to take a holistic market-wide effort. Panelists agreed that industry collaboration will be essential to developing operating models, constructing guardrails and leveraging interoperability standards. These building blocks are key to the governed institutional adoption of tokenization. The Common Domain Model (CDM) was cited as a key enabler for harmonizing processes and ensuring consistency across platforms.
Fundamentally, it’s going to take a village to scale tokenization.
“A good place to start is defining what the new ecosystem will look like three, five years from now. It’s going to happen quickly. And then the other priority is defining how we get there collaboratively.”
Joint efforts across technology providers, regulators and market participants will create a trusted environment for tokenized assets.
What’s Needed to Drive Further Progress?
While webinar attendees were interested in tokenization, and some actively planning for it, roadblocks need to be addressed to spur experimentation and adoption.
- Regulatory certainty: Enforceability of smart contracts and clarity on capital treatment.
- Technology integration: Cloud-native platforms, blockchain connectivity and AI orchestration.
- Interoperability: Standards for cross-chain and cross-jurisdictional operations.
- Community engagement: Shared best practices through ecosystem partners like Nasdaq and ISDA and in industry forums.
The question is no longer if tokenization will reshape collateral management—it’s how fast firms can adapt.
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