“Mauritius Can Lead the Next Chapter of Digital Finance”

• From Virtual Assets to Stablecoins and Tokenisation

Mauritius was an early mover in virtual assets and securities tokenisation. Now, as global finance enters a new phase driven by the tokenisation of real-world assets (RWAs), Loretta Joseph, Director of Coins Digital Markets Ltd Mauritius and policy and law consultant on virtual assets, believes the country has an opportunity to reclaim a leadership role. But technology alone will not be enough. In this interview with Bizweek, she explains why enforceable ownership rights, credible regulation, custody and settlement infrastructure, strong AML/CFT controls and a functioning market ecosystem will determine whether Mauritius can position itself as a trusted hub connecting Africa, Asia and international capital markets.

This is your third interview with us on the evolution of digital finance. How does it connect with your earlier discussions?

In many ways, this interview completes a trilogy. When I first spoke with Bizweek in 2018, Mauritius was beginning an ambitious journey to become the first country in Africa and one of the first globally to establish a responsible regulatory pathway and legal framework for virtual assets.

In 2024, we discussed stablecoins and the increasingly important role they would play in payments, settlement and the wider global financial system. Today, the discussion has moved to the tokenisation of real-world assets, or RWAs.

“Tokenisation may make an asset easier to divide and transfer, but it does not create instant liquidity.”

Since 2018, I believe I have been broadly correct about the direction in which digital finance would reshape the global economy. Of all the developments I have worked on, however, RWA tokenisation may be the most important and certainly the most technically and legally challenging.

Why is real-world asset tokenisation so significant?

Tokenisation has the potential to change how assets are issued, owned, transferred, financed and traded. It can enable fractional ownership, broaden investor access, reduce certain administrative frictions and open markets that have traditionally been inaccessible to many investors.

Funds, bonds, commodities, real estate, infrastructure, intellectual property and other tangible and intangible assets may all potentially be represented digitally.

“Legislation is the foundation, but the ecosystem will determine whether the market succeeds.”

For emerging economies, international financial centres and small island states, this creates a genuine opportunity. Over the past decade, I have repeatedly seen smaller jurisdictions move more quickly and thoughtfully than larger markets. They can become regulatory laboratories for responsible innovation, provided they combine ambition with credibility.

But we should not treat tokenisation as a magic wand. Creating a token does not automatically create liquidity, value or investor demand. Nor does it resolve the legal and commercial questions attached to the underlying asset.

What are the most important legal questions?

The first question is deceptively simple: what does the token actually represent? Does it confer legal ownership, beneficial ownership, a contractual claim, a share in income, voting rights, redemption rights or merely exposure to the value of an underlying asset? If the asset generates rent, dividends or other cash flows, who is legally entitled to receive them?

We must also determine whether the token is a security, fund interest, commodity, derivative, payment instrument or another regulated product. From there, questions arise regarding issuance, licensing, custody, settlement, disclosure, taxation, accounting and secondary-market trading.

If the issuer becomes insolvent, can token holders enforce their rights against the underlying asset? Who holds that asset, where is it located, and is it properly segregated from the issuer’s own property? How are ownership records reconciled between the blockchain and the legally recognised register?

These are not peripheral details. They determine whether the token is legally enforceable, investable and sustainable.

Does tokenising an illiquid asset make it liquid?

No. That is one of the greatest misconceptions surrounding tokenisation.

Tokenisation may make an asset easier to divide and transfer, but it does not create instant liquidity. Liquidity requires buyers and sellers, transparent price discovery, reliable valuation, appropriate market infrastructure, market makers where relevant, and a lawful secondary-trading environment.

You can fractionalise a building into thousands of digital tokens, but if there is no credible marketplace, no investor demand and no clear mechanism for valuing or redeeming those tokens, the underlying asset remains economically illiquid.

Technology can improve market access and operational efficiency. It cannot manufacture economic value or market depth.

What other safeguards are required?

A credible framework must address the entire lifecycle of the tokenised asset. That includes asset and token classification, ownership and enforceable legal rights, the regulatory perimeter, licensing, AML/CFT and sanctions compliance, disclosures and investor protection, custody and settlement, smart-contract governance, cybersecurity, secondary trading, cross-border transfers, taxation, and accounting.

The framework must also establish who may amend or upgrade the smart contract, what happens if the technology fails, how errors or unauthorised transactions are addressed, and whether courts and regulators can enforce rights effectively.

A smart contract may automate aspects of a transaction, but it cannot replace the law. The legal rights must survive beyond the technology through which they are recorded or exercised.

Mauritius introduced a framework for security-token offerings in 2019. Was the country too early?

Mauritius was ahead of the market. In 2019, we established an early regulatory pathway for securities tokenisation. The policy direction was correct, but the technology, institutional infrastructure and global market were not yet sufficiently mature.

The custody solutions were limited, interoperability was underdeveloped, institutional participation was cautious, and there remained considerable uncertainty around legal enforceability and cross-border recognition.

Being early was not a failure. It provided Mauritius with valuable experience and demonstrated that the jurisdiction was prepared to think seriously about the future of financial services.

The market has now caught up considerably. The opportunity is for Mauritius to build upon that early foundation and develop a sophisticated, internationally credible framework for the next stage.

What role has Mauritius played in the Commonwealth’s digital-finance work?

Mauritius has played a leading role across the Commonwealth’s digital-finance agenda. It was the lead country for the Commonwealth Model Law on Virtual Assets and continued that leadership through the Model Law on Stablecoins.

We are now working on the final component of this trilogy: the Commonwealth Model Law on the Tokenisation of Real-World Assets, which we expect to complete within the coming months.

The Commonwealth represents approximately 2.8 billion people across a highly diverse group of developed, emerging and small-island economies. Importantly, many of these countries share legal traditions that allow model laws to provide a practical foundation for domestic reform, while still permitting each jurisdiction to adapt the framework to its own market, constitution and regulatory structure.

Mauritius helped begin this journey in 2018, when I had the pleasure of being a member of the fintech and innovation-driven Financial Services Regulatory Committee chaired by the late Lord Meghdad Desai. It was the blueprint that has continued to drive responsible innovation, not only for Africa, but across the Commonwealth and the wider international community.

Who is involved in developing the RWA Model Law?

We have assembled an exceptional international expert working group. It includes specialists in policy, legislative drafting, securities regulation, AML/CFT, prudential supervision, technology, smart contracts, cybersecurity, custody, taxation and market infrastructure, together with central bank governors past and present, finance ministers and highly experienced industry practitioners, including the architect of smart contract coding and co-founder of Ethereum. 

That diversity is essential because RWA tokenisation intersects with so many areas of law and technology. It cannot be designed solely by technologists, securities lawyers or policymakers. Each discipline sees a different part of the risk.

I serve as the lead expert and architect across these Commonwealth digital finance model laws. My honorary doctorate in international law recognised my global contribution to this field, but this work has never been about one individual. It is the product of an extraordinary group of experts who contribute their time and knowledge pro bono. Together, we have been recognised as Pro Bono Heroes of the Commonwealth.

Why has it taken so long for jurisdictions to develop comprehensive tokenisation laws?

Because it is not easy. If tokenisation could be addressed simply by writing “blockchain” into existing securities legislation, comprehensive laws would have appeared years ago.

A tokenised asset may intersect simultaneously with securities law, property law, insolvency law, contract law, trusts, custody requirements, AML/CFT obligations, data protection, cyber resilience, tax, accounting and private international law.

Cross-border transactions add another layer of complexity. The issuer may be incorporated in one country, the asset located in another, the custodian in a third, the blockchain infrastructure operated globally, and investors distributed across numerous jurisdictions. The framework must determine which laws apply and whether rights will be recognised and enforced across borders.

That is why we must get this right. RWA tokenisation is among the most promising applications of blockchain technology I have encountered, but it must be built by genuine experts and supported by enforceable legal architecture. It cannot remain merely a fashionable buzzword.

What opportunity does this present for Mauritius?

Mauritius has the legal system, financial services expertise, regulatory experience, international networks and geographic position to become a global centre for responsibly structured tokenised assets. The country could provide a trusted base for tokenised funds, bonds, commodities, real estate, infrastructure and other investment products connecting Africa, Asia and international capital markets.

However, leadership will require more than announcing a strategy. Mauritius must establish clear legal recognition of tokenised ownership and investor rights, credible custody and settlement arrangements, strong AML/CFT controls, proportionate licensing, cyber resilience standards and an internationally compatible approach to cross-border business.

It must also develop the market ecosystem: regulated issuers, custodians, exchanges, banks, fund administrators, auditors, lawyers, valuers and technology providers. Legislation is the foundation, but the ecosystem will determine whether the market succeeds.

What is your central message to policymakers and the financial sector?

The central message is that tokenisation is more than technology. It is a legal, regulatory, compliance and market architecture.

Fractional ownership can democratise access to assets and create new opportunities for investors and issuers. It can place emerging markets, international financial centres and small island states at the forefront of the next phase of global finance.

But innovation without enforceable rights will not produce trust. Technology without governance will not attract sustainable institutional capital. Tokenisation without markets will not create liquidity.

Mauritius was bold enough to lead in 2018. It now has an opportunity to draw upon that experience and help define the global standard for RWA tokenisation. If the country gets the framework right and implements it with the same ambition with which it began this journey, it can once again lead Africa and make a significant contribution to the future of responsible global finance.