Yasuda on Tokenization

Stablecoins and deposit tokens represent different approaches to digital currency stability, with stablecoins operating largely outside traditional banking frameworks while deposit tokens function as digital representations of actual bank deposits. The critical distinction lies in regulatory oversight - stablecoins face minimal scrutiny regarding asset-liability mismatches, allowing issuers significant flexibility in reserve management without standardized requirements. In contrast, deposit tokens operate under comprehensive banking regulations that mandate appropriate asset-liability matching, capital requirements, and supervisory oversight.

Another fundamental difference concerns user identity verification. Stablecoins generally don't implement KYC procedures at the token level, with verification typically occurring only at exchange on/off ramps, allowing tokens to move between wallets without identity verification. Deposit tokens, however, require comprehensive KYC for all holders, maintain identity information throughout the token lifecycle, and ensure compliance with anti-money laundering regulations.

While both aim to provide stable digital value, their issuance models differ significantly. Stablecoins are issued by private companies with limited regulatory requirements, whereas deposit tokens can be issued not just by banks but also by authorized third parties that tokenize bank deposits. This third-party issuance model creates flexibility while maintaining the regulatory safeguards that protect users and the financial system, enabling broader distribution without compromising compliance standards.

Smart contracts provide an automated solution for portfolio rebalancing by executing predetermined rules without human intervention. These blockchain-based protocols can continuously monitor asset allocations and automatically trigger transactions when portfolios drift from target allocations. By removing emotional decision-making and delays, smart contracts enforce the disciplined "buy low, sell high" approach that effective rebalancing requires, potentially improving risk-adjusted returns over time.

The efficiency gains from smart contract implementation are significant compared to traditional manual rebalancing. By eliminating intermediaries and automating calculations, smart contracts reduce costs, minimize execution delays, and can be programmed to consider factors like tax implications and transaction costs. This technology is especially valuable for managing complex portfolios with multiple asset classes that would otherwise demand considerable time and expertise to rebalance properly.

Despite their advantages, smart contracts for rebalancing face practical limitations. They currently work best with liquid digital assets that can be easily valued and traded on blockchain platforms. Traditional investments like real estate and private equity remain challenging to incorporate due to valuation difficulties and liquidity constraints. Smart contracts also require careful design to prevent excessive trading during volatile market conditions. As blockchain technology evolves and integrates further with traditional finance, these limitations will likely decrease, expanding smart contract applications across broader investment categories.

Across Asia, real-world asset (RWA) tokenization is advancing rapidly, led by financial powerhouses like Singapore, Hong Kong, and Japan. Singapore has commercialized tokenization efforts through Project Guardian, establishing standardized frameworks and engaging global banks in real-world pilots. Hong Kong’s Project Ensemble Sandbox is similarly ambitious, exploring tokenized deposits and cross-border trade finance with strong regulatory backing. Japan is taking a nuanced legal approach, with institutions integrating tokenized funds and central bank-backed payment systems. Meanwhile, the UAE is making bold moves in real estate tokenization, positioning itself as a digital finance leader in the Gulf.

In Australia and New Zealand, the pace is defined by forward-looking policy and targeted infrastructure projects. Australia has laid out a national roadmap for tokenization, estimating billions in annual efficiency gains and implementing projects across private equity, real estate, and carbon credits. It also participates in Singapore’s Project Guardian, showing growing regional alignment. New Zealand is still in the early stages, with startups like Zodor developing foundational platforms for secure and compliant token issuance, though institutional engagement remains nascent.

Latin America is harnessing tokenization to drive financial inclusion and investment democratization. Brazil and Argentina are developing legal frameworks to tokenize everything from real estate and investment funds to carbon assets. El Salvador stands out with several live RWA initiatives, including tokenized U.S. Treasury bills and industrial property, regulated by its digital assets authority (CNAD). These efforts reflect the region’s strategy to diversify capital access and reduce reliance on traditional financial intermediaries.

Each region reflects a different stage in the RWA journey: Asia is leading with scale and institutional maturity, Australia is emerging with strong policy direction, and Latin America is innovating with real-world utility and inclusion. Together, they are shaping a global transition where digital assets are no longer speculative tools but integral components of modern financial ecosystems.