Digital Assets and Tokenisation: Navigating the Future of Finance with Ayda Chamcham #4

In this episode of Mortgages Covered, the conversation turns to the rapidly evolving world of digital assets and tokenisation. Ayda Chamcham of Aareal Bank shares insights on how digital money, tokenised assets, and new financial infrastructures are reshaping the future of banking and capital markets.

This Episode of Mortgages Covered explores:

• The categorisation of digital assets, including native cryptocurrencies, tokenised real-world assets, and digital money.
• The rapid growth of tokenised money market funds and digital asset adoption with the banking sector.
• Digital asset initiatives and tokenisation platforms launched by major financial institutions, including JP Morgan Chase and Golman Sachs.
• The worldwide momentum of digital assets, currencies and instant cross border payments.
• The regulations, risks, and governance challenges associated with digital assets.

Transcript

SPEAKER_00 0:00

Digital assets and tokenizations, a topic that we hear a lot about, we have to get up to speed with, and I'm a digital dinosaur, so I have no idea what this means. But it's something we're going to be covering today. Welcome to the EMF ECBC podcast, Mortgages Covered. I'm delighted to be joined today by Aida Shamcham from Arial Bank, who knows a lot more than I do about digital assets, which isn't very difficult. So can I first ask Ada, what is a digital asset? Explain it to me like I'm a four-year-old.

SPEAKER_01 0:38

Okay. So digital asset is very simple, is like a transaction happening without any interaction with a third-party oversight. That's easy as it means. So it's really like a financial or like economic claim represented electronically, often on a shared ledger. And what does it mean? Is let's say um uh it's using the um distributed uh ledger technology that is um a type of blockchain. So let's say the DLT is the parent and the blockchain is the child.

SPEAKER_00 1:17

And what kind of what kind of digital assets are we talking about? What's the overview of the structures?

SPEAKER_01 1:23

We have several. We have the cryptocurrencies that are the native digital assets. So we have the Bitcoin, the Ethereum.

SPEAKER_00 1:32

By native you mean it was created on the it only exists in that form.

SPEAKER_01 1:36

Yeah, that's how it like the Bitcoin is the first one, and then Ethereum, like the Bitcoin is the uh digital money, and then the Ethereum is uh 2015 and 2009, kind of to see the balance between the cryptocurrency. Then you have the stable coins that are tokens to um uh use as currency, and you have tokenized deposits, which are commercial bank deposits on DLT, which are for the credit risk of a bank. You have the CBDC, which are the um central bank digital currency. Exactly. Um, and then you have the tokenized securities, the traditional instruments that are like on the shares or uh bond that are on the blockchain, and then you have the utility tokens, which are how to access the network, the uh application or the services.

SPEAKER_00 2:32

So I guess you could really distinguish between, on one hand, securities and payment systems for them.

SPEAKER_01 2:37

Correct.

SPEAKER_00 2:38

And on the other hand, things which only exist in digital form and things which also have a real, can I say real world, and I'd say that now, a real world uh existence and the token is a representation of it.

SPEAKER_01 2:51

Correct, because you can even categorize them in three. You have the native crypto, like the Bitcoin, the Ethereum, that are with no off-chain counterpart counterpart. Then you have the tokenized traditional assets that's like there are the real world assets but are presented on a chain, and then you have the digital money, which are the stable coins, the tokenized bank deposits, the CBDC that exists.

SPEAKER_00 3:17

Okay, right. Now that we've got the definitions sorted, let's talk a little bit about the real-world uses of this, if I can. Um, one of the things which we've we've heard in a previous podcast about uh tokenized security, so let's not touch on that. But tokenized money market funds intrigues me. How large a scale is that and what what does it look like?

SPEAKER_01 3:39

Well, it's um it's a real-time settlement that is existing, where before the training was taking up to two days. Now it's an instant a settlement that is on a tokenized MMF, let's say.

SPEAKER_00 3:52

Um MMF.

SPEAKER_01 3:53

Uh money market funds.

SPEAKER_00 3:55

Okay, sorry.

SPEAKER_01 3:57

And um it's um create 45% efficiency. It's uh making it liquid on a 24-7, and it reduces all the settlement risk when you are uh do is doing the update on the settlement you are using.

SPEAKER_00 4:15

And and how large a market is that and who are the main players?

SPEAKER_01 4:19

Um so uh today you have a lot. You have um which something is really important to remember is you have 12 uh hundred banks uh being in the digital asset and uh as of 2026, which is 78% higher than what it was last year. And the data is changing every month, every day, I would say, because we have new players, it's no more uh old initiatives that are uh there, it's like deployment and development happening. So you have BlackRock that has launched its um bid bid B-U-I-D-L tokenized fund in March 24. Today it represents almost $2.5 billion. You have the Franklin Champlain, it operates from 2023, and it's overall uh uh 420 million assets under management management. You have the GP Morgan also deputed its money tokenized money fund market in December 2025 on the public Ethereum. Uh you have Goldman Sachs with also Benny Milon uh launched their joint uh tokenized um MMF platform in July 25, and they are targeting almost 7.1 trillion by um on the uh money market industry. Then you have Citigroup also getting there, and the Citigroup you have the City Token services. They started with tokenization in 2024 in the US, UK, Singapore, Hong Kong, but in November 25 they got in Europe and they are forecasting um two uh trillion per day in global uh digital assets trading uh within the next five years.

SPEAKER_00 6:00

Those are big names and big numbers and a very impressive growth rate. Something I've heard a bit more about though in on a more early stage is from the ECB and the acceptance um by the European Central Bank of tokenized collateral. Tell me a bit more about that and how significant that is.

SPEAKER_01 6:18

So it's very significant because um uh in the um uh I have to come back to the uh Mika. So Mika, like it's the market in crypto uh asset regulation that has been launched in 2023 with different phases, so it's almost at full implementation with uh July 26 having the uh ECB um uh money uh available on on uh on the digital asset. So this whole lending market is being exceeding, uh it's estimated to exceed 73 billion dollars um on the collateral. Why? Because you have the ECB Pontest platform that has been uh launched in January 26. Um it will has been announced that uh ECB will accept DLT-based securities as collateral in the euro system starting January 26, like almost two months ago. And this means that all the tokens tokenized bonds can back central bank borrowing, making it a formal institutional recognition. Then you have all um, I would say, um the uh development that is happening because you only you don't have only like uh Europe, you also have in UK uh the digital uh DSS, so digital security sandbox that is also happening with the phase-in um uh launch on the digital assets. So it's really, as I said, it's a market momentum happening in the finance where we are no more seeing the traditional or it's like a niche, it's really happening.

SPEAKER_00 7:56

Yeah, well, the ECB, obviously the biggest collateral taker in the Eurozone by far, but when they start accepting digital classes, you know it's a significant, and I know they've been very significant in digital bond settlements and things as well. Yeah, yeah.

SPEAKER_01 8:10

And even last month you had the uh Stuttgart uh Stock Exchange offering um uh digital asset for uh French banks so that they can invest in infrastructure through that. So, you know, it's really becoming a worldwide uh momentum.

SPEAKER_00 8:27

Obviously, the ECB's one collateral take, another similar related market is the repo market, the interbank repo and securities lending market. Is is digitalization significant in that market yet?

SPEAKER_01 8:39

Yeah, it's it's existing as well. It's uh like uh you could see it like um um because in the Ripple, what it is estimated is that 50% of uh improvement on the speed uh is happening. So the fact that when you have a transaction happening and where the cash and the security move on the same time on the chain, it makes the uh settlement of risk and repurchase agreement easier when it's already set because you know you know it's unique, identified, programmable, you it's all protected. As I said, it's like um I used the example earlier to understand the blockchain what it is. It's when you and me we are having like an apartment or books, or let's say this this glass and your glass here, or uh this pencil. Yeah, that will make it. Yeah, I have the black, the blue, and you have the red. So we have an Excel file, and I know Richard has this pen, I have this pen. So this file is blocked, no one will modify it, no one will lock it. So when we want to add someone else and add other pens, or we want to exchange, we need to create a new block. And this kind of settle the this kind of theory that's what creates the DLT or blockchain in a more simplified world. So that's why when it's a ripple, it's easier when you have everything set in the token or digital, like all one like this on the chain, it's easier.

SPEAKER_00 10:11

Right. And and the big one, I guess, is the most expensive, the most difficult thing of all, cross-border payments. And you know, by necessity, central banks as leaders they should care deeply about that. What are the hopes for digital currencies and cross-border payments? I know that's a massive topic.

SPEAKER_01 10:30

It's massive because it will reduce all the delays. You can at 1 a.m. in Singapore do a payment for New York, you don't have to worry about the time difference at the time. So it's really instead of having a trading plus two days, it's an instant trading. And that's changed everything in our uh in like the cross-border payment because it's making it easier.

SPEAKER_00 10:53

And all of this is all very fundamental, very important. But I've always always have to ask about regulators and risks and what could possibly go wrong, and and for all the inefficiencies the current payment system works. Um the banking regulators, the markets regulators, the stability board, all of those people, they must be worried about something. What are they worried about, and what can we do as an industry to address those concerns?

SPEAKER_01 11:18

I I think we all need to work uh hand by hand because we all want to have this working, we all want to go into this uh new way of doing business. Even if we will have different priorities, we will have, we have to share the same interests in this digital transformation. And therefore, we have to look in how we can protect the investor, the consumer, when um the AML or KYC compliance or the sanction enforcement that can happen in this matter in terms of like regulators as a side. I'm not speaking on in behalf of anyone, so it's really my personal view on this. So it's like also what's the risk on this one, how can we have the legal um or the governance uh making um the treatment and resilience on this uh transformation? Whereas in the banks, the banking side, of course, we would like to um make more revenues, make it uh efficient, more operational, um, so to have more treasury, liquidity, and collateral in this business.

SPEAKER_00 12:25

And I guess industry bodies, well, first of all, we have to understand it.

SPEAKER_01 12:29

Yes, correct.

SPEAKER_00 12:31

Um thank you very much for helping us to understand it and for coming here today.

SPEAKER_01 12:34

Thank you, Richard. Thank you.