Tokenised Securities for Insurance Companies and Pension Funds: Opportunities and Compliance

Key Takeaways

• The tokenised real-world asset (RWA) market reached $18-33 billion in 2025, with BCG and ADDX projecting $16 trillion in tokenised assets by 2030.
• BlackRock’s BUIDL fund surpassed $2 billion AUM within 12 months of launch, signalling institutional validation of on-chain treasury products.
• Insurance companies and pension funds face specific regulatory constraints: Solvency II capital charges, prudent person rules, and balance sheet reporting that differ from hedge fund or family office requirements.
• MAS, SFC, FINMA, and the SEC each treat tokenised securities differently - jurisdictional mapping is essential before allocation.
• Aerapass provides institutional-grade custody, trading, and settlement infrastructure for tokenised securities alongside traditional assets through a single platform.

Why Institutional Allocators Are Looking at Tokenised Securities

The institutional case for tokenised securities is no longer theoretical. BlackRock’s BUIDL fund - a tokenised US Treasury product on Ethereum - surpassed $2 billion in assets under management within its first year. Franklin Templeton’s On-Chain US Government Money Fund has operated since 2021. Ondo Finance’s OUSG tokenised treasury product manages over $500 million.

These are not experiments. JP Morgan’s Kinexys Digital Assets platform, SIX Digital Exchange (SDX) in Switzerland, Goldman Sachs’s GS DAP, and Societe Generale’s Forge have each launched institutional tokenised bond and fund infrastructure. They represent a structural shift in how fixed income, treasury, and increasingly alternative assets are being issued, traded, and settled.

For insurance companies and pension funds specifically, the opportunity sits at the intersection of three pressures: yield requirements that traditional fixed income struggles to meet, portfolio diversification mandates that favour alternative assets, and operational efficiency demands that legacy settlement infrastructure cannot satisfy.

BCG and ADDX project that tokenised assets will reach $16 trillion by 2030 - roughly 10% of global GDP. The question for institutional allocators is not whether to engage, but how to do so within their regulatory constraints.

Tokenised Asset Classes: Regulatory Status and Institutional Readiness

Asset Class	Market Size (2025)	Institutional Examples	Solvency II Treatment	MAS Classification	SFC Classification
Tokenised treasuries	$4-6B	BlackRock BUIDL, Franklin Templeton	Government bond capital charge	DPT (payment token)	Virtual asset
Tokenised corporate bonds	$1-2B	HSBC Orion, SBI Digital	Corporate bond capital charge	Capital markets product	SFC-regulated security
Tokenised money market	$2-3B	Ondo OUSG, Maple Finance	MMF capital charge	CIS (if pooled)	SFC-authorised fund
Tokenised real estate	$3-5B	RealT, Lofty	Property capital charge	Likely CMS licence	SFC Type 9
Tokenised commodities	$1-2B	Paxos Gold, Tether Gold	Commodity capital charge	DPT	Virtual asset
Tokenised private equity	$0.5-1B	Hamilton Lane, KKR (pilot)	Private equity capital charge	CMS licence	SFC Type 9

Sources: BCG/Ripple Global Tokenisation Report (2025), MAS DPT Guidelines (2024), SFC Virtual Asset Framework (2025), EIOPA Solvency II (2024)

The Regulatory Landscape for Institutional Tokenised Asset Allocation

Insurance companies and pension funds operate under stricter regulatory frameworks than hedge funds or family offices. The treatment of tokenised securities varies significantly across jurisdictions. Under Solvency II, the key principle is “look-through” - regulators look through the token wrapper to the underlying asset for capital charge purposes. A tokenised government bond receives the government bond spread risk charge, not a crypto-asset charge. EIOPA has confirmed this approach, though insurers must demonstrate the token provides equivalent economic exposure and legal claim to the underlying instrument.

MAS - Singapore

MAS classifies tokenised assets under the Payment Services Act (digital payment tokens) or the Securities and Futures Act (capital markets products), depending on the token’s economic function. A tokenised bond is treated as a security; a tokenised stablecoin is a payment token. Insurance companies regulated by MAS must map each tokenised asset to the appropriate regulatory category before allocation.

Project Guardian - MAS’s collaborative tokenisation initiative with JP Morgan, DBS, and SBI - has established institutional-grade frameworks for tokenised fixed income and FX. The regulatory signals are clear: MAS views tokenisation as infrastructure modernisation, not speculative activity.

SFC - Hong Kong

The SFC’s virtual asset regulatory framework requires platforms dealing in tokenised securities to hold a Type 1 (dealing) and Type 9 (asset management) licence. Insurance companies allocating to tokenised products must ensure the issuing platform holds appropriate SFC licences.

FINMA - Switzerland

FINMA’s DLT Act (2021) provides one of the most developed frameworks for tokenised securities. DLT securities are treated as functional equivalents of their traditional counterparts for regulatory purposes. A tokenised bond carries the same capital treatment as a physical bond - removing a significant barrier for Swiss-regulated institutional investors.

SEC - United States

The SEC applies the Howey test to tokenised assets. Most tokenised securities fall under existing securities regulation. The GENIUS Act (July 2025) provides clarity specifically for stablecoins but does not create a blanket framework for all tokenised assets. US-regulated insurance companies and pension funds must evaluate each tokenised product individually.

Custody and Settlement Considerations

Institutional investors require custody solutions that satisfy their regulatory and fiduciary obligations. Three custody models serve different institutional needs.

Segregated custody maintains each client’s assets in individually identifiable wallets. This model satisfies the strictest fiduciary requirements but adds operational complexity. Insurance companies with per-policy asset backing typically require segregated custody.

Qualified custodian arrangements use regulated third-party custodians (banks, trust companies) that hold tokenised assets alongside traditional securities. This approach integrates most easily with existing custody relationships and balance sheet reporting.

Multi-asset custody - the model Aerapass supports through its wealth management platform - combines traditional and digital asset custody in a single infrastructure. Insurance companies and pension funds can hold tokenised treasuries alongside physical bonds, tokenised gold alongside allocated gold, without maintaining parallel custody systems.

Settlement for tokenised securities operates on a T+0 or near-real-time basis through atomic Delivery versus Payment (DvP) - the security and the cash leg settle simultaneously in a single on-chain transaction, eliminating the settlement risk window that exists in traditional T+1 or T+2 cycles. MAS’s Project Guardian and the BIS have both validated atomic DvP settlement finality on DLT infrastructure through live institutional pilots. For institutional portfolios managing duration and liquidity constraints, atomic DvP reduces counterparty risk and improves capital efficiency.

Balance Sheet Reporting and Valuation

Tokenised securities create specific reporting challenges for institutional allocators. IFRS 9 financial instrument classification, fair value measurement, and impairment testing must accommodate the on-chain characteristics of tokenised assets.

Key considerations:

• Valuation frequency - On-chain assets have continuous pricing, but regulatory reporting may require point-in-time valuations consistent with traditional portfolio holdings
• Audit trail - Blockchain provides an immutable transaction record, but auditors require mapping between on-chain records and accounting system entries
• NAV calculation - For insurance separate accounts and pension fund portfolios, tokenised assets must integrate into existing NAV calculation processes

Aerapass’s customer management platform provides institutional-grade reporting that maps on-chain positions to traditional portfolio reporting formats - supporting both real-time monitoring and regulatory period-end valuations.

Evaluating a Tokenised Securities Platform

Insurance companies and pension funds should assess platforms against five criteria:

1. Regulatory alignment - Does the platform hold licences in relevant jurisdictions (MAS CMS, SFC Type 1/9, FINMA)?
2. Custody model - Can the platform support segregated custody at the policy or fund level?
3. Asset coverage - Does the platform support the specific tokenised asset classes under consideration (treasuries, bonds, commodities, real estate)?
4. Integration - Can the platform connect to existing portfolio management, risk, and reporting systems?
5. Traditional + digital - Can the platform manage both tokenised and traditional assets in a unified view?

Aerapass provides multi-asset trading infrastructure that supports tokenised securities alongside traditional instruments - purpose-built for institutional allocators who cannot maintain parallel systems for digital and conventional assets.

Book a demo to explore institutional trading infrastructure.

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Frequently Asked Questions

What are tokenised securities and how do they differ from cryptocurrency?

Tokenised securities are traditional financial instruments - bonds, treasuries, real estate, commodities - represented as digital tokens on a blockchain. Unlike cryptocurrency, tokenised securities derive their value from the underlying asset and are subject to existing securities regulation. A tokenised US Treasury bond carries the same credit risk and capital treatment as a physical Treasury bond; the tokenisation changes the settlement and custody infrastructure, not the economic substance of the instrument.

Can insurance companies invest in tokenised securities under Solvency II?

Yes, but tokenised securities receive the same capital charge as their underlying asset class under current EIOPA guidance. A tokenised government bond carries the government bond capital charge, and a tokenised corporate bond carries the corporate bond capital charge. Insurance companies must also satisfy custody requirements - segregated custody at the policy level is typically required. FINMA’s DLT Act explicitly treats DLT securities as functional equivalents of traditional securities, removing a significant barrier for Swiss-regulated insurers.

What is the projected market size for tokenised real-world assets?

BCG and ADDX project $16 trillion in tokenised assets by 2030, approximately 10% of global GDP. As of 2025, the tokenised real-world asset market reached $18-33 billion. Key institutional products include BlackRock’s BUIDL fund (over $2 billion AUM), Franklin Templeton’s On-Chain US Government Money Fund, and Ondo Finance’s OUSG tokenised treasury product (over $500 million).

How does settlement work for tokenised securities?

Tokenised securities settle on T+0 or near-real-time, compared to T+1 or T+2 for traditional securities. This reduces counterparty risk and improves capital efficiency. For institutional portfolios managing duration and liquidity constraints, faster settlement means less capital tied up in pending transactions. Institutional investors must ensure their custody and accounting systems can accommodate continuous settlement alongside traditional period-end reporting.