According to Connie Bloem, Co-Founder and Managing Director of Mesh.trade, a licensed financial services provider (FSP) in South Africa, the emergence of tokenization makes it essential for South African financial service providers (FSPs) to embrace this innovation to remain competitive and relevant.
248 firms have received crypto asset service provider licences in South Africa, making it the most vibrant country for crypto businesses on the continent. However, Bloem insists that the CASP licenses should not be limited to businesses that deal in cryptocurrencies.
🇿🇦REGULATION | South Africa Has Now Approved 248 Crypto Providers Out of 420 Received So Far, Only 9 Applications Rejected
This post identifies two key areas that resulted from applications getting rejected by the FSCA.https://t.co/9osgvhErjt @fscasouthafrica pic.twitter.com/2fvVgBZoty
— BitKE (@BitcoinKE) December 16, 2024
She explains that tokenization – the process of converting real-world assets like bonds, equities, and property into digital tokens – is rapidly reshaping the financial landscape. While this transformation may seem dramatic, Bloem emphasizes that it accurately reflects the speed at which the industry is evolving.
Consequently, she argues that most financial advisors cannot offer guidance on these assets because they lack the required crypto asset category for their licenses. This gap limits their ability to meet growing client demand for tokenized financial assets. This risks excluding advisors from a lucrative and rapidly growing business stream.
“There is no other way around it. In this day and age, it is prudent for FSPs to add the crypto asset category to their licenses. Doing so ensures they remain relevant and equipped to offer their clients a comprehensive range of financial services,” says Bloem.
In July 2024, Mesh was awarded Category 1 and Category 2 Crypto Asset Service Provider (CASP) licenses by FSCA, making Mesh the first fully licensed issuance platform in Africa to tokenise financial assets.
- A CAT I license is the standard financial service provider license required for a CASP in South Africa to provide advice or exchange services to its customers
- A CAT II license, or discretionary mandate license, enables customers to financial service providers a mandate to use its discretion to structure the customer’s portfolio, for example
The two licenses are intended to protect customers and investors and enable regulators to take enforcement action for compliance failures.
In 2022, the tokenized asset market was valued at $310 billion. According to a BCG report, this figure is projected to surge to $16 trillion by 2030, accounting for 10% of global GDP.
With tokenization gaining rapid momentum, advisors who hesitate to adapt risk being left behind as competitors capitalize on these emerging opportunities, said Bloem.
According to a 2024 report from the Tokenized Asset Coalition (TAC), the total value locked (TVL) in tokenized assets surpassed $186 billion in 2024, representing a 32% year-to-date increase.
Read full post here: https://t.co/54HBlgvSSH @TACoalition
/end pic.twitter.com/wbmb7gZ5UP
— BitKE (@BitcoinKE) January 29, 2025
Bloem, whose Mesh.trade was recently in the news for facilitating the issuance of a $1.6 million (30 million Rand) capital raise for Water Financial, a South African reverse mortgage provider, has outlined the advantages tokenization brings to all FSPs.
🇿🇦TOKENIZATION | South African Reverse Mortgage Provider, Water Financial, Issues $1.6 Million Capital Raise in Tokenized Assets on the Stellar Blockchain
Water Financial, a registered credit provider with the National Credit Regulator in South Africa, enables individuals with… pic.twitter.com/aTNgrbZYJu
— BitKE (@BitcoinKE) September 16, 2024
Bloem lists the following advantages:
1.) Expanding Investment Opportunities with Alternative Assets
Tokenization is revolutionizing investing by providing access to a wider range of assets, from real estate and bonds to luxury items like art.
It allows financial service providers (FSPs) to offer innovative investment products, meeting the rising demand for alternative assets.
In 2024, Mesh.trade launched Africa’s first tokenized corporate bond, with more groundbreaking products on the way.
As Mike Novogratz, CEO of Galaxy Digital, puts it:
“Tokenization can fractionalize ownership of anything, democratize access, and unlock global investment.”
TOKENIZATION | Nairobi Securities Exchange (NSE) Joins Hedera Network Council to Accelerate Tokenization of Real World Assets – https://t.co/ZxJr1cthSW #Hedera #HBAR #DLT #RWA
— Lucas Ⓥ ℏ (@LucaLucasv) November 5, 2024
2.) Expanding Access to Wealth
Fractional ownership through tokenization allows more people to invest in high-value assets, promoting financial inclusion.
This aligns with Finance 3.0’s vision of broadening access to wealth-building opportunities.
A PwC study found that 57% of global investors are exploring tokenized assets, with retail investors driving much of this interest.
A similar 2024 study by McKinsey revealed that approximately $2 trillion in assets could be tokenized by 2030.
REPORT | McKinsey Reveals About $2 Trillion in Assets Could Be Tokenized By 2030
“Our estimate is exclusive of stablecoins, including tokenized deposits, wholesale stablecoins, and central bank digital currencies (CBDCs) to avoid double counting, as these are often used as the… pic.twitter.com/CyPisrgFym
— BitKE (@BitcoinKE) June 25, 2024
3.) Increased Liquidity and Market Efficiency
Tokenized assets enhance liquidity, enabling seamless global trading of fractional units.
Blockchain technology streamlines transactions, reducing costs and making investing more efficient.
Ethereum Co-Founder, Vitalik Buterin, highlights this shift:
“Tokenization isn’t just about efficiency – it’s about creating systems that are fundamentally more fair and accessible.”
REPORT | 97% of Global Finance Professionals Believe Blockchain will Transform Payments in 3 Years, 27% of African Merchants in One Year, Says Ripple
The report, published by digital payments network, Ripple, in collaboration with United States Faster Payments Council (FPC),… pic.twitter.com/v3UzCN1OKL
— BitKE (@BitcoinKE) October 21, 2023
4.) Transparency and Trust
Blockchain’s immutable ledger ensures secure, verifiable ownership and transactions.
Smart contracts automate processes, reducing the need for intermediaries and making investing faster and more transparent.
As blockchain expert, Andreas Antonopoulos, states:
“With tokenization, trust is no longer dependent on intermediaries. It’s embedded in the system itself.”
According to Larry Fink, CEO of BlackRock:
 “The next generation for markets, the next generation for securities, will be tokenization of securities. It’s going to make the markets much more efficient.”
CRYPTO NEWS: Nigeria’s Securities and Exchange Commission Open to Tokenized Assets But ‘Not Crypto’ https://t.co/WytR2FBtIY
— Crypto Trader Pro 🇺🇸 (@CryptoTraderPro) May 6, 2023
By obtaining CASP licenses, FSPs can stay ahead of changing regulations and provide clients with a comprehensive range of services, including advice on tokenized bonds, equities, and other assets, argues Bloem. This also helps FSPs avoid losing clients to competitors who are better equipped to meet the increasing demand for crypto asset products.
By preparing now, FSPs can gain a competitive edge and be recognized as forward-thinking, tech-savvy advisors, Bloem said. Additionally, adding a crypto asset category to their license opens up new revenue streams, further enhancing their position in the market.
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