KARACHI: As the government plans to tokenise up to $2 billion of domestic government debt, the question many are asking is: what is tokenisation, and why does it matter?
The News reached out to Web3 and digital asset consultant Arsalan Khan who explained that “tokenisation converts realworld value into regulated digital tokens on a blockchain, making large-scale financial programmes more transparent, auditable and efficient.”
“For governments, it is not about speculation,” he added. Instead, they see it as a technical upgrade, a way to issue debt or assets, track where the money goes, and ensure transparency and accountability more efficiently than through traditional systems.
Adviser to Finance Minister Khurram Schehzad on Sunday announced that the finance ministry is planning to tokenise up to $2 billion of domestic government debt in an initial phase. The proposal was disclosed at ITCN Asia, one of Pakistan’s largest annual technology exhibitions, which brings together policymakers, technology firms, investors and startups from around the world.
According to Binance, the world’s largest cryptocurrency exchange whose founder Changpeng Zhao (CZ) works as a strategic adviser to the Pakistan Crypto Council (PCC), tokenisation in blockchain involves creating a unique digital token that corresponds to a specific asset. The token is then recorded on a blockchain, providing a transparent and immutable ledger of ownership and transactions. This process offers several advantages, including increased liquidity, fractional ownership and easier transferability of assets.
Analyst Mudassar Abbas breaks it down: “Traditionally, when the government needed short-term money, it would issue bills to investors at a discounted price and then repay them with profit after a three- or six-month period. Investor engagement in that process was also difficult. With tokenisation, investor engagement has become very easy and quick, and intermediaries have been eliminated. All these benefits can be achieved through tokenisation or blockchain, and due to transparency, there is no corruption or other issues.”
He added that the idea is to make it easier for the government to raise money by using its existing assets. Assets or reserves that are currently idle can be tokenised and used as collateral, much like pledging property or savings to secure a loan. This would allow the government to raise funds not only from domestic investors but also from overseas, while opening participation to a much wider pool of buyers than before.
By simplifying and speeding up the fund-raising process, such mechanisms could also make it easier for the government to access international financing, including from institutions like the IMF. In essence, tokenisation is intended to provide a faster, broader and more efficient way for the state to raise capital, he said.
