Tokenization Today: Where We Are & What’s Driving Change

Tokenization turning real-world assets or financial instruments into digital tokens on blockchains is rapidly shifting from experiment to real infrastructure. The pace is accelerating, with regulators, firms, and ecosystems all pushing forward. Here are the most notable developments:

Key Developments Making Waves

1. RBI to Pilot Deposit Tokenization in India

The Reserve Bank of India (RBI) has announced it will launch a pilot program for deposit tokenization converting bank deposits into tokens starting October 8, 2025. This experiment will run in the wholesale segment of India’s Central Bank Digital Currency (CBDC). The aim: faster, cheaper transactions with embedded compliance features. The RBI is also exploring tokenization of money market instruments like commercial papers.

2. Tokenized Stocks Boom But Regulatory Stakes High

Multiple crypto- and finance firms (Robinhood, Gemini, Kraken, Coinbase) are racing to offer tokenized stock exposure allowing 24/7 trade of equity-like tokens. But there’s controversy. Many of these tokens don’t grant full shareholder rights (like voting or dividends). They behave more like derivatives than true equity. Regulators and financial groups are flagging investor protection issues and the potential fragmentation of liquidity across platforms.

3. Big Moves in Tokenized Funds & Institutional Assets

• KAIO’s Expansion to Sei Network: Tokenization firm KAIO, backed by Brevan Howard and Nomura’s crypto arm, is bringing tokenized funds (like feeder funds for BlackRock and others) to the Sei blockchain. This allows on-chain subscription, redemption, and interaction with DeFi protocols.

• ART & ARK Invest Show Confidence: Cathie Wood’s ARK Venture Fund recently took a stake (~$10M) in Securitize, a major tokenization firm. The move signals that high-profile investment managers see long-term potential in tokenized assets.

• Casper Network & ERC-3643 Compliance: Casper Network is aligning with the ERC-3643 standard (a permissioned token issuance framework) to support regulation-friendly tokenized assets. This can help institutions issue tokens that more cleanly conform to compliance rules.

• Environmental Asset Tokenization: Xpansiv is launching infrastructure to tokenize environmental assets (like renewable energy performance data) on the Canton Network, an institutional blockchain. The intention is to anchor performance data on-chain and enable financial products tied to climate / ESG outcomes.

4. Market Forecasts & Big Numbers

• The market for tokenized funds is expected to surge, with estimates placing it at $1.9 trillion by 2030.

• While the total value of tokenized real-world assets (RWAs) is still modest compared to traditional markets, it’s growing, now measured in tens of billions.

• But there’s a caveat: liquidity remains a major barrier. Even when assets are tokenized, many see low trading volume and long holding periods.

Challenges & Critical Questions

• What’s a Token Really Representing? Many tokenized “stocks” aren’t actual equity. For instance, OpenAI issued a warning about Robinhood’s “tokenized equity” stating that these tokens don’t confer ownership in the company.

• Regulatory Overhang & Fragmentation: Different jurisdictions have varying definitions of securities, derivatives, and tokens. That inconsistency adds friction for cross-border tokenization.

• Liquidity Gaps: Issuing a token is easier than creating an active, tradable secondary market. Many tokenized assets suffer from low activity.

• Custody, Audits & Trust: Users must trust the token issuer, the underlying asset backing, and audits. Transparency is non-negotiable.

• Legal Recognition: Token ownership must map to enforceable legal rights. Otherwise, courts might not treat tokens as binding claims.

What It Means for the Future & Regions Like Nigeria

• Bridging TradFi & DeFi: Tokenization could serve as the bridge enabling traditional asset markets to operate with blockchain capabilities (speed, composability, fractionalization).

• Greater Access: Especially in emerging markets, tokenization can open up investment in real estate, funds, or credit that were previously inaccessible to small investors.

• Regulation as Enabler, Not Barricade: Countries that proactively craft clear frameworks (with licensing, oversight, and investor protections) are likely to attract innovation.

• Local Use Cases Matter: Tokenizing land, agriculture yields, or small-scale local enterprises may be especially powerful in Nigeria and across Africa but success depends on legal clarity, market trust, and infrastructure.

Final Reflections

Tokenization is evolving fast not as a fringe concept, but as an infrastructure shift for assets and ownership. We're moving beyond buzzwords and into real experiments, partnerships, and institutional adoption.

But the path is not guaranteed. The winners will be those who combine regulatory clarity, trust, actual liquidity, and useful products that people actually want to own and trade. As we race towards more “on-chain everything,” expect the debates over rights, compliance, and market structure to intensify.