Financial markets are on the verge of their biggest infrastructure change since trading moved from paper to screens. Yet many people still associate blockchain solely with cryptocurrencies.
Bitcoin introduced blockchain to the world and the crypto market has attracted enormous attention since. But one of the biggest misconceptions is that blockchain and cryptocurrency are the same thing. They are not.
Cryptocurrencies are one application of blockchain. A blockchain is digital infrastructure that allows information and value to be recorded, validated and transferred securely and efficiently. While cryptocurrencies have captured the headlines, the bigger opportunity may lie in how the technology can improve the plumbing of the global financial system.
The distinction between private permissioned blockchains and public permissionless ones matters, too. Private networks may improve efficiency, but they often replicate the features of the systems they are meant to replace. The greatest potential lies in public networks, where transparency, interoperability and shared infrastructure can unlock new ways of transferring value and connecting markets.
Interest is growing globally in tokenisation – representing real-world assets such as cash, bonds, shares and funds as digital tokens on a blockchain. What was once a niche innovation is now attracting the world’s largest financial institutions. Asset managers including BlackRock and Franklin Templeton have launched tokenised investment products, while the Depository Trust & Clearing Corporation is developing tokenised market infrastructure.
Significant benefits
The potential benefits are significant: faster settlement, automated administration and markets made more efficient through programmable smart contracts.
Stablecoins are becoming an important part of this evolution. Designed to hold a stable value by referencing an underlying currency, they are increasingly used to move value across blockchain networks. South Africa has already seen a wave of rand-pegged issuance, with ZARU, ZARP and ZAR Supercoin all now in the market. For businesses, this can mean faster cross-border payments, better liquidity management and less settlement friction. For individuals, it can mean lower transaction costs and improved access to financial services.
Read: How tokenisation is rewiring global finance – and why South Africa can’t sit it out
Tokenisation also addresses longstanding inefficiencies in capital markets. Many transactions still rely on multiple intermediaries, manual reconciliation and settlement cycles that take days to complete. Combining digital assets with smart contracts allows certain steps to execute automatically once predefined conditions are met, cutting complexity and cost while improving transparency.
South Africa should be paying close attention. The local financial system is sophisticated, well regulated and globally respected, yet many of its processes remain costly and dependent on legacy infrastructure. Blockchain is not a replacement for that system but a tool to make existing market structures work better.
There is a competitiveness dimension, too. As major financial centres embrace tokenisation, stablecoins and digital asset infrastructure, local regulatory frameworks will need to evolve so that South African institutions can participate in increasingly connected international markets. Safeguards around capital flows, investor protection and financial stability remain essential – but the rules now being drafted will determine whether the country stays connected to global financial innovation or drifts to the margins of it.
The key question is not whether cryptocurrency prices rise or fall. It is how banks, asset managers, insurers, payment providers and market infrastructures can responsibly put the technology to work. Could tokenised money market instruments improve liquidity management? Could blockchain-based settlement reduce friction in cross-border transactions across Africa? Could programmable assets streamline corporate actions and fund administration? These are practical questions now, not theoretical ones.
Trust
Internationally, banks, exchanges and market infrastructure providers are investing heavily. JPMorgan, Standard Chartered, Nasdaq and Euronext are all exploring or implementing tokenisation projects, while regulators in the US, UK, EU and Singapore continue to develop clearer digital asset frameworks. That involvement from established institutions shows the focus shifting away from speculation and towards practical application inside traditional markets.
The next phase of adoption will be defined not by speculation but by trust. Institutions will move at scale only if the benefits are clear and the risks are properly understood and managed. The challenge for regulators, institutions and market participants is to embrace innovation responsibly without compromising the integrity of the financial system – and to ensure regulation enables participation rather than unintentionally building barriers to it.
- The author, Wiehann Olivier, is partner and global co-head of digital assets at Forvis Mazars
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