Bitcoin’s recent surge has reignited optimism about the potential of the blockchain technology that supports cryptocurrencies, sparking visions of a future where it revolutionizes industries like real estate, bond markets, and more.
One of the key trends this year is tokenization—the process of creating digital versions of physical assets on a blockchain. This concept has become a buzzword in both traditional and crypto finance sectors. The excitement is reminiscent of past enthusiasm surrounding blockchain applications, such as using it to track supply chains or digitize stocks, ideas that ultimately failed to meet expectations.
For years, tokenization of real-world assets, beyond stablecoins, has struggled to gain momentum. Only around 67,530 entities—primarily institutional investors—hold tokenized assets outside of stablecoins, representing a minuscule 0.003% of the global asset value. Many companies working in the space are on the verge of collapse, according to Opimas research.
A key factor in this struggle has been the US regulatory environment, which has been unfavorable to crypto and blockchain ventures. For years, regulators warned banks to avoid the risks associated with crypto, lumping tokenized assets with cryptocurrencies that they deemed to be inherently risky. As a result, financial institutions largely stayed away from blockchain-based innovations, focusing instead on other areas like artificial intelligence.
However, change is underway. With President-elect Donald Trump’s push for a more crypto-friendly regulatory approach, and BlackRock—the world’s largest asset manager—launching a tokenized money-market fund this year, others are beginning to follow suit.
“The landscape has shifted,” said Charlie You, co-founder of rwa.xyz. “Many players who were once hesitant are now accelerating their plans.”
A growing number of financial institutions are embracing tokenization. Visa launched a platform in October allowing banks to issue fiat-backed tokens. Tether, a major stablecoin issuer, followed suit with its own tokenization platform in November. The same month, Mastercard announced that it had integrated its token network with JPMorgan Chase’s Kinexys platform, which settles cross-border transactions on a blockchain. The system already processes around $2 billion in daily transactions, and Mastercard anticipates widespread adoption.
This shift signals a broader trend that could unlock new business models. Raj Dhamodharan, EVP of blockchain and digital assets at Mastercard, believes tokenization is here to stay. The rise of tokenized funds, especially those investing in US Treasuries, is also on the horizon. According to Boston Consulting Group, tokenized fund assets could reach $600 billion by 2030, up from around $2 billion today. The Commodity Futures Trading Commission is even exploring new guidelines for tokenized assets as collateral.
Proponents argue that tokenization can boost liquidity, reduce costs, and speed up transactions, making assets more accessible to a broader range of investors.
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“Tokenizing assets introduces a level of efficiency that is hard to match,” said Rob Krugman, chief digital officer at Broadridge, a company that has tokenized trillions of dollars’ worth of financial transactions. “It could be even bigger than the internet itself—it’s changing the very fabric of how markets operate.”
Still, some are cautious. There are concerns that the rush to tokenize could lead to the digitization of assets that aren’t suited for it, potentially exposing investors to new risks, including hacks. Some also worry that tokenized assets might come with higher fees or be harder to sell.
“There’s a risk of poorly priced assets being marketed to unsophisticated investors,” said Nathan Allman, CEO of Ondo Finance. “Outside of government securities like Treasuries, tokenizing public securities hasn’t yielded much value. Most projects are offering low-quality, overpriced assets.”
Carlos Domingo, CEO of tokenization platform Securitize, remains skeptical about the tokenization of real estate, while Noelle Acheson, author of Crypto is Macro Now, questions the need for tokenizing private equity. She argues that many private companies want to keep equity within a select group of investors and don’t want it freely tradable. Additionally, owning a fraction of a tokenized artwork, like a Picasso, doesn’t provide the buyer with the enjoyment of experiencing the physical piece.
On the flip side, tokenization could mitigate some risks by introducing automation and programmability to blockchain-based assets. For example, blockchain can enable the use of escrow systems, reducing counterparty risk.
Though there are significant opportunities, experts like Ervinas Janavicius from Capco caution that while blockchain’s potential is clear, much work remains before it can fully transform the financial landscape.