Tokenised assets are pushing capital markets toward faster settlement, broader access, and new regulatory choices that could reshape global financial competition.
As tokenisation moves from theory into live financial infrastructure, global markets are entering a new stage of structural change where technology, regulation, and competition increasingly intersect. In this interview, Marius Jurgilas reflects on how his experience across central banking, regulation, and fintech shaped his view of innovation in financial systems. He explains why tokenised assets matter beyond digital experimentation, how distributed infrastructure could improve settlement and liquidity, and why regulatory frameworks such as the European Union’s pilot regime may determine how quickly capital markets evolve across borders.
You have worked both in central banking and financial regulation before moving into fintech. Which experiences most shaped how you think about innovation in today’s financial system?
Coming from Lithuania, I was exposed early to the dynamics of a relatively small and concentrated financial market. In such environments, the concept of contestable markets becomes very real. Innovation does not usually emerge naturally from highly concentrated structures. It either comes from competitive pressure that forces incumbents to improve, or from new entrants attracted by inefficiencies and excess returns created by those concentrated structures. That experience shaped my conviction that competition is one of the most powerful drivers of financial innovation.
Capital market activity can increasingly migrate beyond traditional supervisory perimeters if regulatory frameworks become overly restrictive.
Having worked both inside central banking and later within regulated financial infrastructure, I also developed a strong appreciation for the complexity and importance of financial regulation. However, I have also seen how the argument of “protection” can sometimes be overextended. In many jurisdictions, regulators do not have an explicit mandate to promote competition or innovation, yet their supervisory reach inevitably influences market structure. When the balance tilts too heavily toward risk avoidance, the unintended consequence can be slower market development. This matters even more today because finance is inherently global. With technologies such as tokenisation, capital market activity can increasingly migrate beyond traditional supervisory perimeters if regulatory frameworks become overly restrictive.
Over the course of your career, what major changes in capital markets have had the most lasting impact on how financial systemsoperate today?
One of the most important structural developments has been the gradual breaking down of silos and oligopolistic structures within financial markets. Historically, many parts of the financial system operated as vertically integrated infrastructures with limited competition, resulting in largely self-governing ecosystems. This sometimes meant that anti-competitive practices – such as tying arrangements in mortgage lending or incentive structures built on dominant market positions – received less scrutiny than in other industries. Opening access to core infrastructure has therefore been a critical step toward improving market dynamics.
This structural shift is now extending to the underlying infrastructure of capital markets. Just as electronic trading made physical trading floors obsolete, distributed ledger technology introduces the possibility of shared market infrastructure rather than siloed institutional systems. If implemented responsibly, this could reduce the trade-off between efficiency from scale and the monopolistic power large intermediaries sometimes command. Markets are still far from fully integrated, particularly across borders, but incremental steps toward more interoperable capital markets are improving how risk capital flows across economies.
It is important not to overlook the macroeconomic foundations of financial markets. Without macroeconomic stability, even an advanced market infrastructure cannot sustain investor confidence or long-term capital formation. The macro-financial experience of the past three decades illustrates this clearly. The period often described as the “Great Moderation,” followed by the dot-com collapse and the Global Financial Crisis, provided real-world data on how financial systems behave under stress. These episodes improved understanding of risk pricing, coordination failures among market participants, and systemic ratchet effects that amplify financial cycles. Left unchecked, these dynamics can trap markets in self-reinforcing downward spirals, which is why timely regulatory or supervisory interventions sometimes become necessary.
Tokenisation is often described as the next major transformation of capital markets. In practical terms, how could tokenised assets change liquidity, settlement, and market efficiency?
Today’s capital markets are highly fragmented along institutional and jurisdictional lines. Trading, custody, settlement, and asset registries are typically maintained by different entities, often operating in separate technological environments and legal frameworks. Tokenised assets introduce the possibility of representing financial instruments and their ownership on a shared ledger where issuance, trading, and settlement can occur within the same technological environment. This does not eliminate the need for financial intermediaries, but it can significantly reduce operational frictions between them.
From a liquidity perspective, tokenisation can broaden market access. When financial instruments are natively digital and programmable, it becomes easier to connect participants across jurisdictions and platforms. A more interoperable infrastructure could allow investors to access a wider range of assets while enabling issuers to reach broader pools of capital.
Settlement is where the efficiency gains may be most immediate. Traditional securities settlement still relies on sequential processes, reconciliation between multiple ledgers, and settlement cycles that can extend over several days. With tokenised assets, settlement can occur through programmable delivery-versus-payment mechanisms on a shared ledger, potentially in near real time. This reduces counterparty risk, lowers collateral requirements, and simplifies operational processes.
The broader transformation is therefore less about digitising existing instruments and more about introducing programmability into financial contracts. Tokenised assets can embed lifecycle events, corporate actions, or conditional execution directly into the infrastructure. Over time, this could enable entirely new forms of financial instruments and automated market processes.
As tokenised assets and decentralised finance expand, what role will traditional banks play in the next generation of financial infrastructure?
Traditional banks will continue to play a central role in the next generation of financial infrastructure, even as tokenised assets and decentralised technologies expand. In fact, many of the core functions banks perform today become even more important in a tokenised environment because financial markets still require trusted institutions that manage risk, compliance, and liquidity.
First, banks are likely to remain the primary custody providers for most investors. While self-custody is technically possible in tokenised systems, it is not a realistic option for most institutional investors and many retail clients. Safekeeping of assets, recovery mechanisms, and fiduciary responsibility are areas where regulated financial institutions have both experience and legal frameworks in place. As tokenised securities emerge, banks can extend their custody role to digital assets.
Traditional banks will continue to play a central role in the next generation of financial infrastructure, even as tokenised assets and decentralised technologies expand.
Second, banks will act as the main gateway between traditional finance and tokenised markets. They already perform critical compliance functions such as know-your-customer (KYC), anti-money laundering controls, and transaction monitoring. These responsibilities do not disappear in a tokenised environment. Instead, banks become the institutions that connect regulated capital markets with new digital infrastructures.
Finally, banks will remain key providers of liquidity. Even in highly automated markets, liquidity does not emerge spontaneously. Market-making, balance sheet intermediation, and risk warehousing are functions that require capital and sophisticated risk management. Banks have long performed this role in financial markets, and as tokenised assets develop, their balance sheets and expertise will continue to support liquidity provision and price discovery across new forms of digital financial instruments.
What are the biggest regulatory and operational challenges institutions face when integrating tokenised assets into existing financial infrastructure?
One of the main challenges institutions face is that existing securities, custody, and settlement frameworks, while highly advanced in the EU, are only now evolving to align with tokenised infrastructures. Although tokenisation is clearly a permanent feature of modern markets, the current legislative and policy landscape is still developing in certain areas. Uncertainty around long-term treatment and the interpretation of new rules can sometimes slow strategic investment decisions as institutions seek clarity on how to integrate these assets responsibly.
Interoperability is another major challenge. Tokenised platforms still need to maintain connections with legacy systems to ensure that core functions such as regulatory reporting, investor protection and compliance monitoring continue to operate effectively. Supervisory reporting, risk management processes and audit trails must function in a distributed ledger environment just as reliably as they do in traditional infrastructures. As a result, institutions often need to operate hybrid systems where new DLT-based platforms coexist with established market infrastructure, which adds operational complexity during the transition period.
The EU’s DLT Pilot Regime is often described as a major regulatory experiment in tokenised markets. How does this framework enable innovation while maintaining financial stability?
The EU DLT Pilot Regime represents an important step in creating a regulatory framework for tokenised capital markets. It allows market participants to operate DLT-based trading and settlement infrastructures under a controlled regulatory environment while temporarily granting certain exemptions from existing rules. This approach reflects an “innovation with guardrails” philosophy, enabling experimentation while ensuring that supervision, risk management, and investor protection remain in place.
At the same time, the temporary nature of the regime and the various limits built into it can make long-term strategic planning more difficult for financial institutions, which are the primary users of such infrastructures. Large institutions typically require regulatory certainty before committing significant resources to new market infrastructure. Nevertheless, the regime demonstrates that European regulators are actively engaging with the technology, providing guidance and supervision as the market evolves and helping to build the regulatory experience needed for a more permanent framework in the future.
Looking ahead, how could tokenised financial infrastructure influence how capital flows through the global financial system?
Tokenised infrastructure has the potential to transform capital flows by connecting previously fragmented markets into more interoperable networks. Today, most financial market infrastructures are still largely organised along national or regional lines. Over time, tokenised systems could enable a more integrated “internet of money and assets,” where financial instruments and settlement assets can move more seamlessly across platforms and jurisdictions.
In the EU, this could gradually reduce the fragmentation that still characterises many capital markets and make it easier for investors to access opportunities beyond their domestic markets. New participants may enter these ecosystems as barriers to access decline, while programmable financial instruments could enable entirely new forms of capital allocation. As these infrastructures mature, they could improve the efficiency of global capital flows and expand the range of investment opportunities available to both issuers and investors.
Executive Profile
Before Axiology, Marius Jurgilas (widely recognised as Lithuania’s ‘Godfather of Fintech’) helped transform the country into a leading European fintech hub. As an ex-Board Member of the Bank of Lithuania, overseeing market infrastructure, he led regulatory innovations that attracted major financial institutions, setting a new EU benchmark for financial oversight.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
Source link
#Tokenised #Capital #Markets #Reshape #Finance #European #Financial #Review
