Leaders in the asset management digital asset sectors are working together to make investing cheaper, easier and more efficient.

On a tokenisation panel at the Bermuda Digital Finance Forum, speakers presented a vision of a a financial system where money never sits idle, blockchain infrastructure fades into the background, and artificial intelligence actively manages portfolios in real time.

Sandy Kaul, head of innovation at investment firm Franklin Templeton, said: “One of the most important developments that we have seen in the past two years has been this development of what we are calling at Franklin Templeton, the universal liquidity layer.”

She described this as an emerging ecosystem where stablecoins, tokenised money market funds, tokenised bank deposits and central bank digital currencies can move seamlessly between one another.

According to Ms Kaul, the convergence of these digital assets is creating a new on-chain cash management system capable of delivering institutional-grade treasury functions directly through digital wallets.

“We don’t leave cash sitting in wallets,” she said. “Today, we sweep that cash into a yield-bearing instrument. That is what we are building inside of the crypto ecosystem.”

Ms Kaul argued that under this model, capital should always remain productive.

“You should not lose out on one second of yield with these new rails,” she said, describing a system where idle balances are automatically deployed into yield-generating products and incoming payments are instantly reinvested.

She said the implications for Bermuda’s insurance and reinsurance sectors could be significant, particularly in the insurance-linked securities market.

“A lot of the difficulties that have limited the growth of insurance-linked securities in the traditional space can be so easily solved with smart contracts and auto execution,” Ms Kaul said. “We think this is an incredible opportunity.”

Demand for insurance products, she added, is expected to rise sharply as global risks evolve, creating fertile ground for programmable digital assets and automated settlement systems.

Ms Kaul also pointed to Franklin Templeton’s early move into tokenised finance as evidence that blockchain-based financial infrastructure can dramatically reduce costs.

The asset manager launched what Ms Kaul described as the first tokenised money market fund in April 2021 on the Stellar network. The fund, she said, has operated continuously onchain since launch, trading “24 hours a day, seven days a week” while distributing daily yield.

As part of a pilot requested by the US Securities and Exchange Commission, Franklin Templeton ran 50,000 transactions through both its traditional transfer agent infrastructure and its blockchain-based system.

The difference in operating costs, Ms Kaul said, was striking.

“Those 50,000 transactions cost us $75,000 to do” on traditional systems, she said. “And then we ran the same 50,000 transactions on Stellar and the entire set of 50,000 transactions cost us $1.13.”

Ms Kaul said the resulting efficiencies directly reduce fund expenses and ultimately benefit investors.

“This is why the SEC has given Franklin Templeton the only permission to run our money market fund as a digitally native product,” she said, noting that the fund operates without any off-chain records.

The shift to digitally native finance, Ms Kaul argued, is not only about lower costs, but also greater flexibility and ownership for investors.

“It is the idea that we are putting into your hands the ability to run your financial life in a way that every asset you have can benefit you to its utmost potential,” she said.

A central theme of Ms Kaul’s remarks was interoperability — the ability for assets to move seamlessly across blockchain networks and financial applications without requiring users to understand the underlying technology.

“We believe that you should be able to do business anywhere you want to do business. The technology should not be your gating factor,” she said.

Franklin Templeton, she said, has also developed safeguards designed to address concerns around wallet security and lost digital assets.

“If you had a wallet on a network that had a problem, and for whatever reason that wallet was compromised, we can cancel and replace your tokens,” Ms Kaul said.

Looking ahead, Ms Kaul said the next major evolution will come from “agentive AI” — artificial intelligence systems capable of autonomously optimising investment decisions across decentralised financial networks.

Rather than manually searching for the best lending pool, staking opportunity or yield source, investors could soon rely on AI systems to make those decisions automatically.

She predicted AI agents will increasingly co-ordinate payments, manage liquidity, optimise lending strategies and route assets towards the highest available yields regardless of which blockchain network hosts them.

“We are going to really see smart portfolio decisions being automated at the transaction level on these rails,” she said.

“That’s really the vision for 21st-century portfolio management,” she said.