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An Investment Perspective on Tokenization

The CFA Institute provides an objective assessment of tokenization through the lens of institutional investment management. The report evaluates the advantages

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Abstract

The CFA Institute provides an objective assessment of tokenization through the lens of institutional investment management. The report evaluates the advantages and risks of tokenized assets for portfolios, covering themes such as liquidity management, price discovery, and custody. The CFA notes that while tokenization offers the potential for enhanced diversification and increased access to private markets, investors must carefully consider the idiosyncratic risks of the underlying blockchain technology and the legal uncertainties surrounding digital ownership. The analysis also explores the evolution of the secondary market, questioning whether the promise of ‘always-on’ liquidity will materialize in practice. By grounding the discussion in traditional finance principles, the report helps investment professionals navigate the hype, offering a balanced view of how tokenized assets may fit into a long-term asset allocation strategy while highlighting necessary safeguards for fiduciary responsibility. Authors: CFA Institute Publication: Technical Report Publication date: 2025-01-01

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Key findings

  • Tokenized assets offer potential liquidity improvements in traditionally illiquid sectors.
  • Institutional investors face unique technological risks including smart contract failure and custody security.
  • Regulatory clarity is essential for tokenized assets to meet fiduciary standards.
  • Improved price discovery remains a long-term goal rather than an immediate result of tokenization.

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Citation

CFA Institute (2025). An Investment Perspective on Tokenization. Technical Report. https://rpc.cfainstitute.org/research/reports/2025/investment-perspective-tokenization
Canonical knowledge ID: research:an-investment-perspective-on-tokenization