Bond Tokenization Summit 2026: Experts flag liquidity, custody and cybersecurity challenges for digital bonds

The global push for bond tokenisation is gaining momentum, but financial experts warn that creating digital tokens is only the beginning of a much longer journey. The Zee Business Bond Tokenization Summit 2026, organised in Mumbai on September 9, brought together leaders from finance, policy and technology to examine how real-world asset (RWA) tokenisation and digital bonds could reshape India’s financial landscape and democratise passive income for retail investors.

The penultimate panel discussion at the summit focused on the need for robust frameworks, safeguards and stronger investor protection as tokenised assets move closer to mainstream adoption. STOEX CEO Sudeep Chatterjee said the concept of Security Token Offerings (STOs) has helped streamline the asset issuance process, but argued that a much broader infrastructure is required to support digital assets beyond the point of issuance. Chatterjee said industry leaders are increasingly turning their attention to the logistical, legal and operational challenges that emerge after a token is minted.

Singapore offers a glimpse of the challenges

Chatterjee cited Singapore as an example of the gap that can emerge between technological capability and market readiness. The country has emerged as a major testing ground for digital finance, with the Monetary Authority of Singapore (MAS) using Project Guardian to explore tokenised financial assets. "Under the Monetary Authority of Singapore's (MAS) Project Guardian, financial institutions have conducted approximately 15 localized sandbox experiments to test tokenized assets.While these trials proved that tokenized bonds can be successfully issued on a ledger, they also exposed a fragmented secondary market," said Chatterjee. The experience, he said, highlights a fundamental challenge facing the tokenisation industry: successfully creating a token does not automatically create a functioning market around it.

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Three key challenges after a token is created

• Trading and liquidity: Tokenised bonds need access to traditional and digital exchanges where they can be listed and actively traded. Without sufficient secondary-market liquidity, tokenisation may not deliver its promised benefits to investors.
• Asset safeguarding: The industry needs secure, institutional-grade custody infrastructure capable of protecting digital assets while providing investors with confidence around ownership and security.
• Settlement and onboarding: Market participants also need mechanisms for real-time distribution and standardised processes through which global investors can legally access tokenised asset networks.

Legal recognition of digital ownership

One of the biggest challenges, he said, is establishing the legal status of tokenised ownership. "First, the industry is introducing an entirely new method of asset ownership. For these digital bonds to scale, this new format must be deeply regularized and legislated. Global legal frameworks must explicitly define what a token represents, ensuring that digital ownership holds the exact same legal weight as traditional paper-and-registry documentation in a court of law," he said.

Cybersecurity remains another major hurdle

Beyond regulation, blockchain-based infrastructure introduces a new set of operational and cybersecurity risks. "Second, blockchain infrastructure brings its own distinct operational challenges, most notably the threat of cyberattacks and hacking risks. Smart contracts and distributed networks open up new vulnerabilities that require robust, institutional-grade defense systems," said Chatterjee.

He argued, however, that such technology-related risks should be viewed as part of the broader evolution of financial systems rather than as a reason to halt innovation. Chatterjee emphasised that the banking sector itself has faced significant IT and technology risks during its digital transformation over the past three decades. Tokenisation, he said, will face similar challenges as traditional financial ownership is combined with blockchain-based technology. The priority now, according to Chatterjee, should be to address these vulnerabilities proactively by establishing stronger legal, regulatory, cybersecurity and market infrastructure.