By Damian Black
Tokenisation for everything, everywhere. That’s what some pundits are starting to talk about. In this view, tokens are seen as just another form of digital wrapper, another form of securitisation, if you want, superseding newer wrappers and structures such as exchange-traded funds, and sometimes even hosting them within the structure.
The idea is to create seamless, instant, real-time, 24-hour liquidity for anything from ETFs through Treasuries to private credit. And the big asset management firms are embracing the token at great speed – as are some of the mainly American exchanges. Nasdaq, for instance, recently published a white paper finding that more than half of firms expect to use tokenised collateral by the end of the year.
So, what’s going on? Is this really a “quiet revolution powered by asset tokenisation” as the World Economic Forum claimed in August 2025, or just everything much as it was inside a different wrapper?
There can be no doubt that the big institutions are getting into the game. In May, State Street announced a cautious but determined foray into tokenised assets. The $5.6 trillion asset manager previously viewed as a ‘tech naysayer’ says it wants to be an “early adopter” of tokenised funds; it’s indicative of a wider shift.
BlackRock, too, has been making no secret of its wish to offer tokenised services. It recently upgraded its $2.3 billion BUIDL tokenised fund to become a productive asset – meaning investors can use their tokenised funds to earn yields, an historic first. This new product has been strategically launched in the UAE because it benefits from the regulatory clarity provided by the dedicated Virtual Assets Regulatory Authority.
Clarity and on/off ramps
Clarity will be key to seeing the prediction of tokens everywhere for everything to come true. In the US, SEC chairman Paul Atkins gave a keynote speech in November, highlighting the importance of a “clear token taxonomy”.
“Developers, exchanges, custodians, and investors have been trying to navigate in a fog, without SEC guidance,” he said. “If the United States insists on making every on-chain innovation run through a securities-law minefield, those innovations will migrate to jurisdictions that are more willing to distinguish among different kinds of assets, and [...] write down the rules in advance.”
Another key issue is interoperability, which appears to be a major hurdle faced by stablecoins – the wheelhouse of tokenization. As a16zCrypto notes, last year, transactions in digital currency totalled an estimated $46 trillion – nearly 20 times that commanded by PayPal and triple that of Visa.
The facility is certainly there – you can send a stablecoin far and wide in less than a second for less than a cent. But as16z caveats: “What remains unsolved, however, is how to connect these digital dollars to the financial rails people actually use already every day — in other words, on/off ramps for stablecoins.”
Still a long way to go...
Toby Nicole is the founder of I Am My Own Asset and teaches her 39,000 TikTok followers the ins and outs of cryptocurrency, stablecoins, and tokenisation. She agrees that on- and off-ramps are an obstacle that the tokenisation industry will have to surmount before it can become available to a wider range of investors.
“I help everyday people learn to understand and position themselves in our evolving new financial system and the infrastructure being built around it,” Nicole says. “The on-and-off ramping problem is still the biggest friction point for retail investors and institutions. Getting dollars into the system and back out again is where the vision has to deal with reality.”
Right now, that reality consists of “know your customer delays, limited banking access and platforms freezing customers’ accounts without advance warning – I've seen this first-hand with my own community followers”. Matthew Schneider is CEO at Building, a company that specialises in the tokenisation of real-world assets (RWA). He believes the shift needed to make stablecoins interoperable is underway.
“Tokens will become much more common, but not because everything suddenly becomes liquid or accessible.” The coming shift is that financial instruments will become more programmable, more transparent, and easier to move between systems. Right now, stablecoins suffer from what Schneider calls a “reconciliation problem”.
“In theory, a fiat-backed stablecoin is simple: one token should correspond to one dollar, or dollar-equivalent asset, held somewhere off-chain,” he tells me. “The on-chain representation has to remain aligned with off-chain reserves, redemption rights, banking access, custody, and liquidity.”
The problem arises when stablecoin holders lose confidence in the digital asset’s ability to be redeemed like-for-like in fiat currency. This can cause a stablecoin to “detach from its intended value”.
“This is why reserve quality, reporting frequency, redemption mechanics, and independent oversight matter so much,” explains Schneider. “The same problem applies more broadly to tokenisation. When that asset is represented digitally, the token is only as reliable as the data and legal structure behind it. If ownership rights, asset performance, valuation, or reporting are not properly maintained, the on-chain instrument can become detached from the real-world asset it is supposed to represent.”
However, Schneider points out that this problem is not unique to blockchain. “Private markets already suffer from opacity,” he says. “Investors in real estate, private credit, or private equity often receive limited reporting compared with public markets.” However, poorly structured tokenisation runs the risk of exacerbating this. “It can actually amplify the problem if assets are distributed and traded without a better data infrastructure underneath.”
Time to clean house
Crypto expert Mark Langshaw of Echo Finance agrees that tidying up the digital industry’s messy infrastructure will be the key to ubiquitousness.
“Obviously, following the rapid expansion of the crypto market, we’ve seen projects launch without having efficient systems and strong infrastructure in place first. When you look at fiat-backed stablecoins, there needs to be complete transparency regarding their reserves.”
He adds: “Just like we prioritise due diligence when partnering with firms in the mortgage sector, crypto consumers need to know exactly what is backing these assets. A lack of regular, independent audits simply doesn’t provide the best outcome for consumers.”
Does he think tokenisation can spread by opening up the investment game to a wider field of smaller, retail investors? Langshaw concedes that fractionalization makes the investing process more streamlined and therefore more accessible. However, sustained growth on the back of this alone will not be possible.
“You have to form a solid foundation before leaping into continued growth,” he tells me. “If retail investors are going to be heavily involved in tokenised assets, there needs to be complete transparency.”
Langshaw suggests there is a learning curve to be surmounted, as potential investors familiarise themselves with the complex terms and conditions that apply to crypto-based assets. “[As with] complex products like equity release, platforms offering tokenised assets need to allow consumers additional time to digest the terms and other important information related to this type of product,” he says. “Obviously, regulators are becoming more focused on consumer rights in the digital asset space. I think these are positive changes that will lead to far better consumer outcomes across the industry over the next decade.”
Tokens – a new way to lose money?
However, those who dream of big bucks by starting small in fractionalized tokenized assets might want to manage their expectations a little. “Tokenisation does open the door and being able to own a fraction of assets that used to have $100K minimums is genuinely a big deal,” concedes Nicole, “but that does not automatically mean an even playing field for retail investors. Most people still do not understand what they are buying or the custodial risk that comes with it – so without education behind it, they really just found a new way to lose money.” Surely this is really just a case of “meet the new boss, same as the old boss” – with big players like BlackRock getting richer as smaller investors struggle?
“When it comes to BlackRock and institutions muscling in, the ‘meet the new boss’ question is something I think about a lot,” Nicole says. “The infrastructure being built around ISO 20022, the XRP Ledger and on-chain settlement was designed to move value more efficiently – but I question who ends up controlling these rails.”
Rather ominously, she adds: “Right now the biggest players like BlackRock [and] JP Morgan are positioning to own them – and that should concern everyone.” The best way to stop this happening is through better education: “I, as a retail investor, only win if the technology stays permissionless and everyday people learn how to use it before institutions lock in the big advantage for good.” But make no mistake – the big guns are firing loud and clear and “tokens will be everywhere before long”. And not only thanks to BlackRock and JP Morgan's tokenized treasury funds.
“Real estate is being put on the blockchain, stocks and bonds are next, and we can own fractional pieces of all of it,” Nicole says. “We will be able to trade them 24/7, cutting out the middleman. Stablecoins are just the currency flowing between the tokenized assets, they are what is making the whole system move.”
Regulations like the stalled Clarity Act, which aims at establishing a clear regulatory framework for digital assets, will be another key driver towards “mass adoption” as investors and consumers feel better protected – memories still loom large of the FTX scandal in 2022, which saw the $32 billion crypto exchange wiped out after it emerged that customers’ funds were misused.
