Why Tokenization Isn’t Living Up to the Hype Yet

Tokenization has become one of the most talked-about innovations in finance, but despite the buzz, it's struggling to deliver real value. Many investors remain skeptical, and the lack of clear, consistent regulations is slowing down meaningful progress. In too many cases, assets are being tokenized without improving accessibility, efficiency, or liquidity; they're simply becoming digital versions of already inefficient systems.

While the concept of on-chain tokenized portfolios might excite crypto-native investors, that audience represents only a small slice of the broader market. For tokenization to truly take off, it needs support from both institutional and retail investors who are looking to modernize, not just mirror traditional financial assets.

The Industry’s Misplaced Focus

So far, the sector has been focused primarily on compliance and replicating real-world assets on-chain. But mainstream investors still lack compelling reasons to participate. Even with interest from giants like BlackRock, adoption is slow. Why? The industry hasn’t addressed critical issues like ease of trading, liquidity, and fragmented regulations.

Without solving these fundamental problems, traditional investors, especially those managing large portfolios, are unlikely to engage. Many still view crypto with suspicion, some even comparing Bitcoin to a Ponzi scheme. If institutional players are expected to enter this space, they need time, education, and tools to confidently navigate tokenized investments.

The Reality Check: Practical Use Must Come First

The focus of tokenization should shift from hype to utility. According to a recent white paper by Boston Consulting Group, tokenized assets could represent trillions in assets under management (AUM) by 2030. But to get there, the industry must offer real benefits: increased liquidity, transparency, and usability.

Currently, assets held by major custodians offer very limited flexibility. Yes, they can sometimes be used as collateral, but the process is clunky and outdated. And let’s be honest—pension fund managers aren’t going to fire up MetaMask wallets to access decentralized finance. Real adoption means building a secure, compliant, and user-friendly infrastructure for both everyday and professional investors.

Tokenization Can Transform Finance If Done Right

Tokenization holds enormous potential to revolutionize financial markets. By turning traditional assets into smart contracts, many manual and outdated processes can be automated. This opens doors to entirely new financial use cases that traditional systems can't handle.

However, relying on the old financial infrastructure legacy custodians, fund managers, and administrators won’t get us there. According to the World Economic Forum, tokenization could finally enable true collateral mobility. But the process today remains costly, slow, and overly complex, discouraging institutional and retail participation alike.

The solution? Focus on building systems that offer tangible value and usability systems that encourage long-term adoption instead of short-term hype. The Regulatory Puzzle: Still a Global Mess

One of the biggest barriers to mainstream adoption is regulatory inconsistency. While jurisdictions like the Hong Kong Monetary Authority (HKMA) and Abu Dhabi Global Market (ADGM) are making proactive moves, the global picture remains fragmented.

For example, if you tokenize an asset in ADGM and want it to be compatible with HKMA regulations or trade it on a decentralized exchange, you’ll face the challenge of complying with multiple, often conflicting, regulatory regimes. Now multiply that challenge across 150+ jurisdictions. Without harmonization, the dream of a seamless, global tokenized financial system dies before it starts.

Large financial players are already working to find ways to make tokenization viable under current laws, but piecemeal efforts won't be enough. A unified global regulatory framework is urgently needed.

True Financial Inclusion Requires More Than Tokenization

Tokenizing traditional assets isn't the endgame, it’s the starting point. To democratize finance, tokenized assets must offer practical utility. They should be easily traded, lendable, or usable as collateral. More importantly, they need to be accessible to retail investors, not just the institutional elite.

Right now, many tokenized opportunities are only available to accredited investors, reinforcing the financial inequalities that tokenization was supposed to fix. Real change means removing those barriers, not digitizing them.

The Path Forward: Purpose Over Hype

This industry is still in its infancy, which means there’s time to course-correct. If regulators, innovators, and global markets can align on standards, tokenization of real-world assets (RWA) could explode by 2030.

But that future depends on focusing less on buzzwords and more on building real solutions. Tokenization has the power to reshape global finance if we stop chasing hype and start solving real-world problems.