One major piece of market infrastructure for tokenised assets remains underdeveloped: credit markets.
At ADFW, it was clear that firms – notably SemiLiquid – are looking to fill this gap as the UAE develops further regulation on tokenised assets.
From Tokenisation to Utility
Tokenisation has largely succeeded in making assets more mobile and programmable.
In practice, tokenised assets today remain in a buy-and-hold state. Investors can acquire them and redeem them with issuers, but they cannot easily deploy them as collateral or integrate them into broader balance sheet strategies, according to the Co-Founder and CEO of SemiLiquid: Rico van der Veen.
The reason is structural rather than conceptual. Tokenised assets are still governed by traditional securities regulations. Ownership is restricted via whitelists, issuers tightly control transferability, and participants must undergo extensive KYC, KYB, and counterparty due diligence.
Therefore, sourcing credit lines remain slow for large financial institutions, specialised fintech firms, and asset management firms. Traditional bilateral credit arrangements can take six weeks or more to set up.
That timeline alone makes tokenised finance impossible to scale as on-chain finance becomes mainstream.
Semi Liquid Labs and the Programmable Credit Protocol
However, firms are looking to scale-up credit lines for tokenised assets without the fuss.
SemiLiquid Labs, through its Programmable Credit Protocol (PCP), is building infrastructure to bring scalability to tokenised credit without compromising regulatory safeguards.
At a high level, the protocol enables institutions to borrow against tokenised assets without moving those assets on-chain or out of custody.
Instead, the underlying asset remains with a regulated custodian. Borrowers can request loans using tokenised assets as collateral, whilst lenders compete to provide liquidity, typically denominated in stablecoins.
Once loan terms are accepted, custodians are instructed to lock the collateral, earmarking it for the duration of the loan. Stablecoins move from lender to borrower, while the asset itself remains stationary but legally encumbered.
This structure eliminates the need for DeFi-style custody transfers. Crucially, it reduces counterparty risk on both sides. Borrowers retain control of their assets during the loan lifecycle, while lenders are protected by enforceable custodial instructions in the event of default.
Solving the Bottlenecks in Tokenised Credit
The core bottleneck in tokenised credit markets is bureaucracy.
Tokenised assets are subject to issuer-controlled whitelists and jurisdictional compliance requirements. Each new counterparty relationship requires manual checks, documentation, and legal review. This makes credit markets fragmented, slow, and non-composable.
By standardising loan terms and automating verification, SemiLiquid’s approach compresses weeks of paperwork into minutes, while maintaining the same security and regulatory guarantees.
This enables tokenised credit markets to move from bespoke arrangements to mainstream transactions.
Regulation: Why Abu Dhabi Stands Out?
The UAE, specifically ADGM, is taking proactive measures on digital asset regulation.
“‘ADGM has already been really helpful with regulation,” said Rico. ADGM been especially supportive of models that sit between financial institutions rather than outside the regulatory perimeter.
According to the CEO of SemiLiquid, ADGM has already been helpful and as we sit in-between infrastructures – across financial institutions, custodians, and the lenders – those assets will not be taken out of this secured regulated environment.
This alignment has resonated with regulators. ADGM’s framework encourages innovation while remaining explicitly risk-aware, making it well-suited for infrastructure that enhances capital efficiency without introducing systemic opacity.
The Missing Piece: Legal Standardisation
One area where regulators could further accelerate adoption is legal standardisation, says Rico.
Today, SemiLiquid relies on a multiparty legal contract signed in advance by borrowers, lenders, and custodians. This agreement ensures enforceability across jurisdictions, allowing lenders to pursue remedies in courts such as London or New York, depending on custodial location.
The framework is being developed in collaboration with the International Securities Lending Association (ISLA).
However, a local regulatory endorsement or even a reference legal template could significantly increase adoption.
“It would be great if you have a local entity of a local regulator that takes the first step and says, we know that a multi-party form of that legal framework could be really beneficial to these credit markets,” said the CEO.
Market Trends and the Road to 2030
By 2030, tokenised assets are expected to exceed $10 trillion in total market value. Yet without scalable credit infrastructure, that capital will remain underutilised.
The evolution is unfolding in stages: making assets programmable, enabling such assets to be used as collateral, and finally building credit markets around tokenised instruments.
The market is now transitioning from stage one to stage two. Institutions are no longer asking whether tokenisation works, but how can they be sufficiently regulated and scaled up.
Without automated, compliant credit markets, tokenisation risks becoming a technological wrapper around static assets. Protocols like PCP aim to ensure tokenisation translates into genuine financial utility.
Tokenised finance will not scale on issuance alone, but on scaling up the borrower-lender process, via efficient mechanisms in-house within a regulated environment.
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