From the Edges to the Core: Tokenization Enters Institutional Portfolio Construction

By Henry Zhang, Founder & Group CEO, DigiFT

For much of the past decade, tokenization sat on the margins of financial innovation—interesting, promising, often technically impressive, but still largely separate from the frameworks institutions use to manage real capital. In the early years, the industry did what it always does with emerging technologies: it observed, experimented, and waited to see where the substance lay.

Having spent over two decades working in capital markets and financial infrastructure, I have seen many innovations arrive with excitement only to fade when they encountered the realities of institutional risk management, governance, and operational complexity. The innovations that endure are those that improve the architecture of markets themselves—not by replacing what works, but by strengthening the foundations on which institutions operate.

Tokenization is beginning to do exactly that.

It is moving from the periphery of experimentation into the core of portfolio construction. And it is doing so not through sweeping disruption, but through the steady representation of regulated financial instruments in programmable, interoperable formats that make them easier to access, hold, and integrate into global investment workflows.

The earliest implementations focused on short-duration exposures: cash strategies and money market products that provided a controlled environment for proving the safety, transparency, and operational discipline of tokenized formats. These early steps resembled the industry’s first attempts at digitizing legacy processes—necessary foundations rather than ends in themselves.

Today, we are seeing a more meaningful shift. More sophisticated strategies—including equity income exposures issued by global institutions like BNY Investments—are now being represented on-chain in programmable form.

This is a notable milestone. When mainstream, income-generating public-market strategies begin operating as programmable assets, tokenization is no longer a technical curiosity. It becomes a practical tool for how institutions construct, rebalance, and distribute portfolios.

At DigiFT, we see the reasons for this shift every day. Institutions operate across fragmented settlement systems, global time zones, and infrastructures that were not designed for the pace or connectivity of today’s markets. Much of the inefficiency that investors navigate has nothing to do with the underlying exposures themselves. It stems from the mechanisms surrounding them: manual verification, delayed reconciliation, jurisdiction-specific processes, and systems that do not speak to each other in real time.

Tokenized assets address these constraints at the asset layer. When ownership rules, settlement parameters, and transfer conditions are embedded directly into the asset’s digital form, the instrument becomes far easier to integrate into institutional workflows. It moves with fewer intermediaries. It reconciles more efficiently. It aligns more naturally with modern treasury systems, custodial technologies, and global distribution platforms.

Importantly, this evolution does not replace the safeguards institutions rely on. It preserves them. The regulatory frameworks, governance requirements, and custodial models that underpin institutional confidence remain constant. What changes is the operational architecture—the way in which those well-understood exposures can be accessed and managed.

This is also why DigiFT was founded. From day one, we believed tokenization would only achieve institutional relevance if it aligned with the standards of traditional finance: transparency, regulatory clarity, and operational integrity. We built our infrastructure not as an alternative system, but as a modern extension of the frameworks institutions already trust. It is harder to do it this way—but it is also the only path that leads to meaningful adoption.

As more asset classes move into programmable formats, the value compounds. Institutions can design portfolios that reflect the interconnected nature of modern markets. They can allocate across borders with fewer operational barriers. They can incorporate real-time information directly into portfolio management. And they can rely on infrastructure that mirrors the speed, precision, and interoperability of the broader digital economy.

Tokenization is not rewriting the principles of investing. It is refining the machinery that supports them.

What began as a peripheral innovation is becoming a structural evolution—one that repositions tokenized assets from the edges of finance to the core of institutional portfolio construction.

As this shift accelerates, our responsibility is clear: to advance it with the same discipline, transparency, and governance that institutions apply to every other part of their portfolios. Technology may evolve quickly, but trust is earned slowly. And the future of tokenization will be shaped not by how fast we can innovate, but by how faithfully we can uphold the standards that make institutional finance resilient in the first place.

About Henry Zhang

Henry Zhang has over two decades of senior leadership experience across global financial institutions and fintech innovation. Before founding DigiFT, he held key executive roles including Deputy CEO of China at Citibank and Standard Chartered, and CEO of Greater China at East West Bank. During his banking career, he led several industry firsts in China’s financial technology landscape, including the world’s first cross-border cash concentration system and the country’s first bilingual online banking platform.

In 2022, Henry founded DigiFT in Singapore to build a next-generation platform for the tokenization, trading, and distribution of institutional-grade real-world assets (RWAs). Under his leadership, DigiFT became the first on-chain exchange licensed by the Monetary Authority of Singapore (MAS), with its Hong Kong entity approved by the Securities and Futures Commission (SFC) for Type 1 and Type 4 regulated activities. Today, Henry works closely with regulators, financial institutions, and the Web3 ecosystem to advance compliant, institutional-grade tokenized finance.

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