The Tokenization of Financial Assets: How SimCorp is Driving Digital Innovation

The financial sector is undergoing a fundamental transformation with the rise of asset tokenization. Powered by blockchain technology, tokenization is reshaping how investments are created, exchanged, and managed. But integrating digital assets into traditional financial systems introduces operational, regulatory, and technological complexities.

SimCorp is helping institutions bridge that gap. With SimCorp One, firms can now manage both traditional and digital assets on a single, unified platform.

In December 2023, SimCorp partnered with Alloy, a fintech leader in digital asset infrastructure, to deliver seamless tokenized asset integration for institutional portfolios.

What is Asset Tokenization?

Asset tokenization is the process of converting ownership rights in real-world or financial assets — such as equities, bonds, real estate, or commodities — into digital tokens recorded on a blockchain. These tokens can be traded, transferred, or integrated into portfolios like traditional assets.

It offers broader access to investments but also introduces new operational and regulatory challenges.

Key benefits include:

• Enhanced Liquidity. Fractional ownership makes high-value assets more accessible and tradable.

• Greater Transparency & Security. Blockchain provides an immutable audit trail, reducing fraud risk.

• Operational Efficiency. Smart contracts automate settlements, lowering intermediary costs.

Potential downsides include:

• Regulatory Uncertainty. Varying legal definitions and compliance obligations across jurisdictions.

• Integration Challenges. Complexity in connecting digital assets with legacy systems and infrastructure.

SimCorp’s Role in Enabling Tokenized Investment

SimCorp has enhanced its platform to support tokenized assets and Decentralized Finance (DeFi) instruments. Traditional systems often struggle with fragmented data and workflows, especially when blockchain-based assets are involved. SimCorp overcomes this by offering a consolidated and real-time total portfolio view, across all asset classes.

Through its partnership with Alloy, SimCorp allow clients to manage tokenized securities, cryptocurrencies, and conventional assets side-by-side, with full transparency and operational efficiency. Technically, Alloy provides technology which directly interacts with various distributed ledgers and digital asset trading platforms. The Alloy platform acts as the connective glue to the market and allows data elements, critical for position keeping, to be reflected in the SimCorp enterprise platform.

Implementation Within SimCorp

From a technical perspective, blockchain-based assets in SimCorp are not treated as entirely separate instrument types. Instead, SimCorp uses a separate data component on the static data to recognize an asset is tokenized. The underlying features and instrument type classification (e.g., money market fund, equity, etc.) remain unchanged. The tokenization aspect is simply an additional attribute that indicates the asset exists on a blockchain.

This approach allows for seamless integration of tokenized assets alongside traditional investments while maintaining consistent classification and processing standards across the platform.

Example: Franklin Templeton’s BENJI Token

A compelling example of SimCorp’s capability is its integration with Franklin Templeton’s BENJI token.

SimCorp has demonstrated advances in digital innovation through its collaboration with Franklin Templeton. Together with Alloy, SimCorp integrated Franklin Templeton’s BENJI token, a tokenized U.S. government money market fund. This milestone allows institutional investors to seamlessly incorporate blockchain-based assets into their traditional portfolios, ensuring unified management and enhanced transparency across the investment chain.

Franklin Templeton has been a pioneer in blockchain technology and digital assets in the industry, investigating opportunities as early as 2019, but they are not the only players in the market. JPMorgan and Citi as well as others have explored the use of blockchain and smart contracts to improve operational efficiency within their business.

BENJI represents shares of the Franklin OnChain U.S. Government Money Fund (FOBXX) — the first U.S.-registered mutual fund to process transactions and record share ownership on a public blockchain. Built initially on Stellar, BENJI is now available on multiple blockchains including Polygon and Avalanche.

Key features include:

• Stable Yield. The fund aims to maintain a $1.00 NAV, investing in U.S. government securities with daily liquidity.

• Blockchain Integration. Compatible across multiple blockchains for broader investor reach.

• Digital Access. Investors can transact via the Benji Investments app, now with USDC-to-USD conversion support.

• Peer-to-Peer Transfers. Institutional holders can transfer shares directly between blockchain wallets.

One of SimCorp’s core value propositions is a single integrated platform for all asset classes, delivering the Buy Side a total portfolio view of all assets. By enabling BENJI to be integrated into traditional investment platforms, SimCorp and Alloy achieve this for their clients and at the same time, bridge the gap between tokenized assets and institutional portfolio management.

Looking Beyond: SimCorp's Innovation Strategy

SimCorp recognizes that digital assets are still rapidly evolving, and it's not yet clear which solutions will solve genuine problems of sufficient magnitude to effect lasting change. Rather than picking vendors early who may or may not succeed as the market consolidates, SimCorp has adopted a partnership approach — collaborating with the most promising vendors and forward-looking clients to jointly test where value lies and identify challenges.

This approach provides access to broad innovation across the fintech domain while reflecting digital assets on the core enterprise platform, SimCorp One. SimCorp is already planning additional use cases with counterparties and Deutsche Börse Group, with plans to expand as the industry evolves.

Institutional Adoption Expands: Deutsche Börse’s Clearstream Offering

The momentum behind institutional digital asset adoption continues to grow. In April 2025, Deutsche Börse Group will launch crypto custody and settlement services through its post-trade arm, Clearstream.

Institutional clients will gain access to cryptocurrencies such as Bitcoin and Ethereum within Clearstream’s existing infrastructure. The service will be powered by Crypto Finance, a Deutsche Börse subsidiary regulated for digital asset custody. This initiative reflects the accelerating commitment of financial infrastructure providers to bring blockchain assets into the mainstream.

A Rapidly Expanding Market

According to rwa.xyz (Treasury Market Cap as of May 14, 2025), tokenized assets have grown by a staggering 1,400% in the past 24 months — from less than USD 450 million to more than USD 6.8 billion. Industry forecasts suggest that the market could reach USD 10–16 trillion by 2030. (BCG, Standard Chartered, Roland Berger)

Real-world implementations like BENJI and infrastructure rollouts like Clearstream's crypto offering prove the future of finance is already unfolding — and institutions are getting ready.

Opportunities for Institutional Investors

Tokenization opens doors to:

• Previously illiquid or complex asset classes,

• Faster and more transparent settlements,

• Operational efficiencies across asset types.

With end-to-end support for both traditional and digital investments, SimCorp helps institutional investors to be ready to scale in the evolving digital landscape.

Risk Factors, Challenges, and Regulatory Concerns

Despite its advantages, tokenization carries risks:

• Legal and Regulatory Uncertainty. Asset treatment and compliance obligations vary globally (BIS, IMF). SimCorp's approach is to monitor and follow regulatory requirements as they become established, adapting its platform accordingly.

• Cyber and Operational Risks. Smart contract vulnerabilities and tech failures may introduce new threats (BIS).

• Valuation and Fragmentation. Inconsistent pricing and lack of standards can reduce market clarity (IMF, BIS). The industry is still developing pricing standards, but SimCorp expects Alloy to feed these prices into SimCorp One from where the asset is custodied, creating a consistent valuation framework.

Mitigating these challenges requires robust governance, regulatory alignment, and resilient infrastructure.

Current State of Operational Benefits

While tokenized asset integration promises significant operational efficiencies and cost reductions, SimCorp acknowledges that measurable client benefits are not yet applicable given the infancy of the industry. As the tokenized asset ecosystem matures and achieves greater scale, the operational advantages are expected to become more quantifiable and significant.

Final Thoughts: Be Ready for What’s Next

The tokenization of financial assets is not a passing trend, it’s a foundational shift. SimCorp’s investment technology, combined with forward-thinking partners like Alloy and Franklin Templeton, and the growing institutional momentum from players like Deutsche Börse, all signal a new future for capital markets.

Firms that embrace this shift today won’t just keep pace — they’ll lead.

Unlock the Full Potential of Your SimCorp Investment

Our team of SimCorp specialists is ready to help you navigate the digital transformation. Whether you're just starting your tokenization journey or scaling blockchain-enabled capabilities, we’re here to help.

Contact us today to schedule a consultation and discover how to maximize your SimCorp platform in the era of digital assets.