Tokenization in 2025: Reality Check
A Market That is Suddenly Getting Large
Over the past three years, real-world assets (RWAs) recorded on public and permissioned blockchains have expanded from a pilot-sized US $5 billion in 2022 to roughly US $24 billion today, an almost five-fold rise that has outpaced every other digital-asset segment.
Daily wallets holding RWA tokens now exceed 200 000, and more than 190 distinct issuers are active, ranging from global banks to regulated fund complexes.
Analysts no longer ask if tokenization will matter but how large it can become: Boston Consulting Group’s mid-range scenario foresees US $16 trillion of tokenized assets by 2030, roughly 10 % of projected global GDP, while Standard Chartered’s longer-dated forecast suggests as much as US $30 trillion by 2034.
The drivers are unmistakably institutional. BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) has climbed toward US $2 billion in assets; J.P. Morgan’s Kinexys platform has processed more than US $1.5 trillion in notional repo volume since launch; and Franklin Templeton’s on-chain money-market fund now supports peer-to-peer transfers on Ethereum and Stellar.
Prevailing Assumptions vs. Regulatory and Market Constraints
Widely-Held Assumption
Tokenization lets anyone mint a fractional claim on anything.
What the Current Framework Actually Implies
Securities and consumer-protection laws apply in full. EU MiCA/MiFID, U.S. Securities Act tests and Swiss FINMA’s DLT Act treat most security tokens exactly like paper-based securities. Issuers must still publish prospectuses, perform KYC/AML and respect transfer restrictions.
Widely-Held Assumption
Putting an asset on-chain magically solves the liquidity problem.
What the Current Framework Actually Implies
A token still needs distribution and market-making. Listing demands a regulated digital exchange (e.g., Securitize Markets) or a permissioned venue (e.g., JPM Onyx). Absent market depth, bid-ask spreads remain wide.
Widely-Held Assumption
If I tokenise, liquidity is automatic/Tokenization is a back-door way to avoid supervision.
What the Current Framework Actually Implies
Global regulators are increasingly proactive: U.S. enforcement actions against unregistered token sales and EU sandbox programmes demonstrate that oversight is converging, not loosening.
For most mid-size issuers, conventional certificates and notes still reach deeper capital pools at lower distribution risk. Tokenization must therefore stand on hard economic merits - cost, capital efficiency, or new functionality - not on the mere promise of digital “dematerialisation.
Who is Driving Adoption and What Benefits Do They Name?
| Lead Adopter | Flagship Tokenised Product | Principal Benefit Claimed | Supporting Evidence |
|---|---|---|---|
| BlackRock | BUIDL on Ethereum | Intraday liquidity & global wallet distribution | public statements and fund flows (coindesk.com) |
| Franklin Templeton | OnChain U.S. Government Money Fund (BENJI) | Transfer-agency cost cut from US $1 per transaction to ≈US $0.00003 (US $1.52 for 50 000 transfers) | internal pilot data disclosed at RWA Summit (linkedin.com) |
| UBS Asset Management | uMINT USD money-market token | 24/7 subscriptions & redemptions via smart contracts | press releases (media-publications.bcg.com) |
| J.P. Morgan – Kinexys | Tokenised intraday repo & deposit receipts | Same-day collateral mobility; reduction of daylight overdrafts | platform metrics (thefullfx.com, jpmorgan.com) |
| MAS Project Guardian | Tokenised MMF pilot with Citi, DBS, Fidelity | Cross-chain delivery-versus-payment and automated compliance | regulator announcements (web-assets.bcg.com) |
The common thread: large, liquid cash-equivalent instruments that already price to $1 per share or have overnight duration.
The three bank-level benefits they cite most often
A. Operational cost and error reduction
Franklin Templeton’s blockchain back-end cut the cost of processing 50 000 shareholder transactions by over 60 % versus its legacy fund-admin stack. J.P. Morgan’s Project EPIC estimates 35 - 65 % savings on reconciliation, corporate-action processing and transfer-agency fees for tokenised instruments
B. Capital efficiency through near-instant settlement
Moving from T+1 to so-called atomic (T+0) settlement frees intraday liquidity and slashes counter-party risk - precisely what money-market desks optimise for JPM’s Kinexys repo platform lets treasurers recycle collateral several times a day instead of once, lowering funding costs and “cash drag”
C. Programmability & transparency
Smart contracts can enforce transfer-restrictions, coupon payments, NAV calculations and even regulatory reporting in code, reducing manual errors and audit latency.
On-chain registers give both regulators and investors an up-to-date cap table without waiting for registrar uploads.
Why money-market instruments are moving first
It is therefore unsurprising that virtually every live institutional tokenisation pilot in 2024-25 is a money-market or cash-management instrument rather than real-estate or art.
Tokenisation vs securitisation once everyone is on-chain
| Dimension | Tokenised money-market share | Classical securitised note |
|---|---|---|
| Trade & settlement | Atomic (seconds) on DLT, real-time cash & asset leg | T+1 (best-case) via CSD, CLS or tri-party |
| Servicing cost | Transfer-agent logic in smart contract (≈35–65% cheaper) | Paying agent, trustee, registrar all charge basis points |
| Secondary-market reach | 24/7 on compliant digital exchanges; still shallow today but growing | Deep, global bond markets, but fixed trading hours |
| Compliance workflow | Code-level whitelists, audit trail immutability | Manual KYC/AML checks and bi-weekly reconciliations |
Interpretation. For high-velocity cash instruments, tokenization already yields net economic gains. For bespoke, long-dated asset-backed securities the advantage narrows, because legal structuring—not back-office processing—is the dominant cost driver.
Top-down, not bottom-up
Tokenization is spreading because balance-sheet giants find it improves treasury plumbing, not because retail investors suddenly crave fractionalised exotic assets. The headline growth figures obscure that almost all new volume is:
Retail-focused experiments (fractional art, real-estate NFTs) remain marginal. Until regulated exchanges have deeper order-books and more custodians support digital securities, most corporates will still prefer conventional certificates or notes for broad distribution.
Top-down transformation: adoption is led by giants who move large amounts of money and tokenization gives benefits on scale.
Regulation is converging, not retreating: issuers must treat tokens as securities in every major jurisdiction; compliance automation is a feature, not a loophole.
Today, tokenization seems beneficial only if (i) real-time settlement materially benefits the issuer (either by reduced cost or increased liquidity), or (ii) operational savings outweigh distribution frictions.
Tokenization is no shortcut to easy capital. It is, however, becoming indispensable infrastructure for money-market, where milliseconds matter and basis-points are profit. The momentum is unmistakably institutional and top-down, driven by the largest banks and asset managers optimising their own liquidity, not by small issuers looking for regulatory arbitrage.
Eventually the shift will occur and the benefits will pour down to smaller issuers.