What Is Tokenization

Tokenization is the process of representing real-world assets — government bonds, money market funds, real estate, private credit — as digital tokens on a blockchain. The concept is not new: stock certificates have always represented ownership claims. What is new is the infrastructure. Blockchain-based tokens settle in minutes rather than days, trade 24/7, and can be fractionalized to any denomination.

The market is scaling rapidly. The real-world asset tokenization market reached $33.91 billion in 2025, representing 70% year-over-year growth. Forecasts range from McKinsey’s conservative $4 trillion to Standard Chartered’s bullish $30 trillion. Major asset managers are already in production: BlackRock, Franklin Templeton, Janus Henderson, and Fidelity have all tokenized US Treasuries.

Tokenization addresses three structural inefficiencies in traditional finance. First, accessibility: money market funds traditionally available only to large institutions are being tokenized and made accessible to a broader range of investors. BlackRock’s BUIDL fund on Ethereum allows qualified investors to access US Treasury yields on-chain.

Second, liquidity: tokenized funds settle in minutes rather than the T+1 or T+2 cycles of traditional finance. For treasury management, this means near-instant access to liquidity rather than waiting days. Third, cost: according to Calastone’s 2025 study of 26 global asset managers, tokenization could reduce overall fund operating costs by 23%, with savings of 30% in fund accounting and 25% in transfer agency.

Tokenization is not without risk. Regulatory frameworks vary by jurisdiction and asset type — a challenge for platforms operating across borders. Smart contract vulnerabilities remain a concern, though institutional-grade security practices are improving. Liquidity risk persists for less-traded tokenized assets: fractional ownership is easier to create than liquid secondary markets.

For advisors, the due diligence framework should focus on the quality of the underlying asset, the regulatory status of the issuer, the security of the blockchain infrastructure, and the depth of secondary market liquidity.

Advisors have three main routes to tokenization exposure, each with different risk profiles and accessibility constraints.

Tokenization runs primarily on smart contract platforms, with Ethereum dominating institutional adoption. BlackRock’s BUIDL, Franklin Templeton’s OnChain fund, and Ondo Finance’s USDY all settle on Ethereum. As more assets move on-chain, the networks processing those transactions capture more value through fees and — in some cases — deflationary token burns. Blockchains such as Ethereum, Solana, BNB, Hyperliquid, Sui and Sei provides exposure to this new economic activity. 

For advisors seeking liquid, regulated exposure, US-listed spot Altcoin ETFs like CoinShares’ DIME  provide straightforward access: these diversified crypto index products that weight toward smart contract platforms offer broader exposure to the infrastructure layer.

Several public companies are building tokenization infrastructure:

• Coinbase (COIN) provides custody for BlackRock’s BUIDL and is building institutional tokenization services
• CME Group (CME) and Intercontinental Exchange (ICE) are exploring tokenized derivatives and settlement
• Broadridge (BR) operates a distributed ledger repo platform processing over $1 trillion monthly

These offer tokenization exposure without direct crypto holdings, relevant for clients with investment policy constraints.

The tokenized funds themselves — BUIDL, Franklin’s OnChain, Ondo’s USDY — are generally restricted to qualified purchasers or accredited investors. Most require minimum investments of $100,000+ and onboarding through crypto-native platforms. For now, these remain institutional products rather than retail-accessible vehicles.

Tokenization is unlikely to replace traditional finance infrastructure overnight. But it is likely to push regulated institutions to adopt blockchain rails for settlement, record-keeping, and compliance automation. The winners will bridge both worlds — combining regulatory credibility with blockchain efficiency. For advisors and their clients, the question is not whether tokenization will happen, but how soon it will become seamlessly embedded in everyday financial products.

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