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Tokenization: Think Evolution, Not Revolution
Tokenization: Think Evolution, Not Revolution
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Yasin Ebrahim
Yasin Ebrahim
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Institutional adoption of tokenization is making progress. Conversations are increasingly moving away from the benefits of the technology to a new, actionable sphere: utility.
This new stage is driven by a motive banks understand well: delivering better utility in the channels customers already use, while building toward the channels customers are moving toward. Different client needs translate into different speeds and layers of adoption. That is pushing institutions toward pragmatic upgrades to settlement, collateral, and distribution, rather than a wholesale rewrite of finance.
“One of the problems isn’t the technology. It’s the assumption that tokenization will solve everything quickly. In reality it will be an evolution, making existing processes a little cheaper, faster, and more flexible” Antony Pankin, CEO & Co-Founder of Realworld Solutions, Inc. told Investing.com’s Yasin Ebrahim.
That evolutionary lens matters because the emerging end-state looks less like “one chain to rule them all” and more like a hybrid stack that institutions can actually deploy. Stablecoins have proven open, high-volume settlement in live markets. Tokenized deposits are now extending that logic into regulated, bank-native settlement. Interoperability layers are gradually stitching the system together across venues, chains, and legacy infrastructure.
Customers don’t want tokenization; they want better utility
A useful way to understand how institutions are thinking about adoption is to start with the customer, not the chain.
Customers do not wake up wanting “tokenization.” They want faster settlement, better collateral mobility, continuous access, and cleaner liquidity management. These improvements can feel mundane until they become decisive.
“We’re trying to meet customers wherever they are currently—whether they have wallets or whether they’re still using legacy distribution models,” Roger Bayston, Head of Digital Assets at Franklin Templeton, told Ebrahim in a recent interview, focused on money market funds. Bayston framed tokenization’s edge not as ideology, but as an operational upgrade: “That instant transferability and intraday yield add utility to the already strong brand of trust that money market funds have.”
This marks a core framing shift from “should we tokenize?” to “where does tokenization improve utility inside products customers already trust, and where does it reduce cost and friction inside workflows that are expensive to maintain?”
Tokenization is increasingly being judged on customer experience and operational performance, rather than ideology.
Why progress on tokenized adoption looks both fast and slow
Tokenization looks both fast and slow because two things are true at once: the market is scaling rapidly, yet most institutions are adopting in narrow, use-case specific ways rather than executing a wholesale shift.
On one hand, the market has expanded dramatically. Tokenized real-world assets (RWAs), excluding stablecoins, have more than than tripled market cap to $23 billion year-over-year increase from 2024 levels.
Still, separating noise from signal is difficult because much of what gets branded as “tokenization” is not comparable. Institutions are moving at different speeds because they are pursuing different adoption modes, and because different jurisdictions, client demands, and internal constraints force different sequencing.
There are at least three adoption modes happening simultaneously.
Tokenization in name only: Some firms are effectively putting a representation layer on-chain, but leaving the operational stack off-chain. In practice, this can resemble taking the contents of an Excel spreadsheet of assets and publishing them onto a blockchain. It is digital representation without workflow transformation. It can be a step forward, but it does not capture the full proposition.
“I think that a lot of times what I see that is happening is that people don’t really use blockchains… Most of the real data lives off-chain and really all that the blockchain is a representation of tokens,” Yuval Rooz, co-founder and CEO of Digital Asset, the company behind Canton Network, a privacy-enabled blockchain used by major financial institutions, told Ebrahim.
While that can still be progress, Rooz argues “it is not really achieving the value proposition of blockchain, which is how we can put all data on a chain to really streamline financial services front to back.”
Workflow migration: This is the harder, more institutionally relevant form of adoption. It is not just that data is tokenized, but that core workflows move with it, and do so with controls that survive compliance review. This is where the promise becomes tangible: settlement that can run continuously, collateral that can be managed with fewer manual touchpoints, and processes that become more auditable and more programmable.
Selective modernization: Many banks are not deciding whether to adopt tokenization “in general.” They are deciding where tokenization makes sense inside their current operating model, and what they will not touch yet. That leads naturally to hybrid designs. Stablecoins can serve open settlement and platform-level liquidity. Tokenized deposits can serve regulated, bank-native settlement. Interoperability becomes the bridge rather than a feature.
That hybrid approach also reflects competitive pressure. “I think a lot of banks over the next 12 to 24 months will issue their own stablecoins as a way to protect against the flight of deposits towards stablecoins,” said Sid Powell, CEO and co-founder of Maple Finance, an on-chain asset manager.
This is why banks’ tokenization sequencing often starts with cash. Stablecoins showed settlement can be faster and always-on. Demand followed. Then the strategic risk became obvious: if customers can move value on faster rails outside the bank, deposits become a flight risk. Tokenized deposits are the bank-native response. To borrow an old brokerage-floor rule: money goes where it’s served best.
Progress also looks uneven because banks face a fragmented market structure. Some institutions want to build private, permissioned environments that they can govern tightly. But their clients may want exposure elsewhere: assets held on different chains, counterparties operating on different rails, or new opportunities arising outside the bank’s preferred ecosystem. From a bank’s perspective, this raises a hard question. Do they narrow scope and serve clients only in a small set of supported environments, or do they partner with infrastructure providers that can help them cover more terrain?
That is a core reason tokenization adoption is not a single wave. Different banks, different client bases, and different risk tolerances lead to different playbooks.
The educational gap slowing adoption
The early conversations around tokenization centered on chain design. Now the problem has shifted to translation. Digital-asset teams at banks may understand the utility, but the rest of the institution needs the story in operational terms: controls, governance, auditability, and what can go wrong at scale.
“Digital asset teams could come up with something that is actually creative, works, is applicable, and fits within regulations. But then when they take that to the next level, you’re taking it to people who do not understand blockchain… let alone how they are going to operate at scale on that,” said Daniel Jarvis, Managing Director of Realworld Solutions, Inc. “Then it becomes a bit of a teaching exercise… people outside traditional finance probably don’t appreciate how long a time that is going to take.”
The translation stage is also where operational risk becomes the real brake on adoption. An executive working in on-chain credit and yield markets said the longest portion of institutional due diligence is often not the credit model or the product wrapper, but operational risk: wallet controls, signing governance, custody arrangements, and whether the setup can withstand audit scrutiny and avoid hack-related failures.
Yuval Rooz said the fastest way to move tokenization forward inside a bank or financial institution is not to promise a transformation, but to run small deployments that produce explainable results and survive internal scrutiny.
“Take baby steps that prove we know how to use the technology and convert it into positive results for us or our clients” Rooz said. As meaningless as those steps may appear, they "build internal confidence that teams know what they’re doing and are thinking about financial returns, for both the organization and the client. That accelerates adoption.”
The final frontier: burying the tech
The near-term winners are not the firms promising a total reset. They are the ones adding utility to products that already carry trust, then expanding outward from there.
Over time, the clearest signal of real adoption may be that tokenization disappears as a headline. It becomes a means to an end: faster settlement, better collateral mobility, and always-on access.
“That’s really what matters, that the technology itself is just completely buried,” Jarvis said. “Now you just buy stocks, but they happen to be tokenized… you don’t really care about the technology in the background and where it sits and what chain it’s on… you just [know] that when you log into your app, you can see it.”
Jarvis’s point implies a shift in the adoption question. Once tokenization is invisible, success depends less on the rails themselves and more on the interface that normalizes them. That is where distribution becomes decisive.
Robert Crossley, head of industry advisory services at Franklin Templeton has argued that digital wallets are likely the distribution channel for the next generation of financial services. In that framing, tokenized assets do not win because people demand tokens. They win because wallets, platforms, and interfaces make programmable value economically usable, forcing traditional finance incumbents to meet customers there.
Payment behavior already points in that direction. Digital wallets and cards now account for 92% of preferred payment methods, while cash has fallen to a historic low of 7%, according to Billtrust’s 2025 Gen Z and Digital Payments Study.
Regulation: the next big unlock
But the scramble to distribute tokenized assets at scale will remain constrained until regulation catches up. “This is going to be a huge tipping point in the industry,” Bayston said, describing the watershed moment for mass adoption as one where the SEC approves third-party distribution of digital asset securities.
Major crypto exchanges such as Binance, Coinbase, and others that have been on journeys to register securities-related activities are likely to be among the winners. “When there is a full-on third party distribution of digital asset securities, then you’re going to see actually a massive wave of tokenized real-world assets and securities coming forward on these exchanges,” he added.
For others, the next regulatory unlock could be just around the corner. Powell said there is “very strong expectation” the U.S. gets a market structure bill this year. “If you get that in place, then you get clear investor protections. You get capital requirements for offering, whether it be tokenized securities or other kinds of on-chain products,” he added.
Tying these threads together, it’s clear the market end-state is shaping up as a multi-rail ecosystem: stablecoins for open settlement and platform-level liquidity, tokenized deposits for regulated, bank-native settlement, and interoperability layers that connect them across venues and legacy infrastructure. That is why adoption looks more like evolution than revolution.
Originally published on Investing.com. Read the full article here.
Institutional adoption of tokenization is making progress. Conversations are increasingly moving away from the benefits of the technology to a new, actionable sphere: utility.
This new stage is driven by a motive banks understand well: delivering better utility in the channels customers already use, while building toward the channels customers are moving toward. Different client needs translate into different speeds and layers of adoption. That is pushing institutions toward pragmatic upgrades to settlement, collateral, and distribution, rather than a wholesale rewrite of finance.
“One of the problems isn’t the technology. It’s the assumption that tokenization will solve everything quickly. In reality it will be an evolution, making existing processes a little cheaper, faster, and more flexible” Antony Pankin, CEO & Co-Founder of Realworld Solutions, Inc. told Investing.com’s Yasin Ebrahim.
That evolutionary lens matters because the emerging end-state looks less like “one chain to rule them all” and more like a hybrid stack that institutions can actually deploy. Stablecoins have proven open, high-volume settlement in live markets. Tokenized deposits are now extending that logic into regulated, bank-native settlement. Interoperability layers are gradually stitching the system together across venues, chains, and legacy infrastructure.
Customers don’t want tokenization; they want better utility
A useful way to understand how institutions are thinking about adoption is to start with the customer, not the chain.
Customers do not wake up wanting “tokenization.” They want faster settlement, better collateral mobility, continuous access, and cleaner liquidity management. These improvements can feel mundane until they become decisive.
“We’re trying to meet customers wherever they are currently—whether they have wallets or whether they’re still using legacy distribution models,” Roger Bayston, Head of Digital Assets at Franklin Templeton, told Ebrahim in a recent interview, focused on money market funds. Bayston framed tokenization’s edge not as ideology, but as an operational upgrade: “That instant transferability and intraday yield add utility to the already strong brand of trust that money market funds have.”
This marks a core framing shift from “should we tokenize?” to “where does tokenization improve utility inside products customers already trust, and where does it reduce cost and friction inside workflows that are expensive to maintain?”
Tokenization is increasingly being judged on customer experience and operational performance, rather than ideology.
Why progress on tokenized adoption looks both fast and slow
Tokenization looks both fast and slow because two things are true at once: the market is scaling rapidly, yet most institutions are adopting in narrow, use-case specific ways rather than executing a wholesale shift.
On one hand, the market has expanded dramatically. Tokenized real-world assets (RWAs), excluding stablecoins, have more than than tripled market cap to $23 billion year-over-year increase from 2024 levels.
Still, separating noise from signal is difficult because much of what gets branded as “tokenization” is not comparable. Institutions are moving at different speeds because they are pursuing different adoption modes, and because different jurisdictions, client demands, and internal constraints force different sequencing.
There are at least three adoption modes happening simultaneously.
Tokenization in name only: Some firms are effectively putting a representation layer on-chain, but leaving the operational stack off-chain. In practice, this can resemble taking the contents of an Excel spreadsheet of assets and publishing them onto a blockchain. It is digital representation without workflow transformation. It can be a step forward, but it does not capture the full proposition.
“I think that a lot of times what I see that is happening is that people don’t really use blockchains… Most of the real data lives off-chain and really all that the blockchain is a representation of tokens,” Yuval Rooz, co-founder and CEO of Digital Asset, the company behind Canton Network, a privacy-enabled blockchain used by major financial institutions, told Ebrahim.
While that can still be progress, Rooz argues “it is not really achieving the value proposition of blockchain, which is how we can put all data on a chain to really streamline financial services front to back.”
Workflow migration: This is the harder, more institutionally relevant form of adoption. It is not just that data is tokenized, but that core workflows move with it, and do so with controls that survive compliance review. This is where the promise becomes tangible: settlement that can run continuously, collateral that can be managed with fewer manual touchpoints, and processes that become more auditable and more programmable.
Selective modernization: Many banks are not deciding whether to adopt tokenization “in general.” They are deciding where tokenization makes sense inside their current operating model, and what they will not touch yet. That leads naturally to hybrid designs. Stablecoins can serve open settlement and platform-level liquidity. Tokenized deposits can serve regulated, bank-native settlement. Interoperability becomes the bridge rather than a feature.
That hybrid approach also reflects competitive pressure. “I think a lot of banks over the next 12 to 24 months will issue their own stablecoins as a way to protect against the flight of deposits towards stablecoins,” said Sid Powell, CEO and co-founder of Maple Finance, an on-chain asset manager.
This is why banks’ tokenization sequencing often starts with cash. Stablecoins showed settlement can be faster and always-on. Demand followed. Then the strategic risk became obvious: if customers can move value on faster rails outside the bank, deposits become a flight risk. Tokenized deposits are the bank-native response. To borrow an old brokerage-floor rule: money goes where it’s served best.
Progress also looks uneven because banks face a fragmented market structure. Some institutions want to build private, permissioned environments that they can govern tightly. But their clients may want exposure elsewhere: assets held on different chains, counterparties operating on different rails, or new opportunities arising outside the bank’s preferred ecosystem. From a bank’s perspective, this raises a hard question. Do they narrow scope and serve clients only in a small set of supported environments, or do they partner with infrastructure providers that can help them cover more terrain?
That is a core reason tokenization adoption is not a single wave. Different banks, different client bases, and different risk tolerances lead to different playbooks.
The educational gap slowing adoption
The early conversations around tokenization centered on chain design. Now the problem has shifted to translation. Digital-asset teams at banks may understand the utility, but the rest of the institution needs the story in operational terms: controls, governance, auditability, and what can go wrong at scale.
“Digital asset teams could come up with something that is actually creative, works, is applicable, and fits within regulations. But then when they take that to the next level, you’re taking it to people who do not understand blockchain… let alone how they are going to operate at scale on that,” said Daniel Jarvis, Managing Director of Realworld Solutions, Inc. “Then it becomes a bit of a teaching exercise… people outside traditional finance probably don’t appreciate how long a time that is going to take.”
The translation stage is also where operational risk becomes the real brake on adoption. An executive working in on-chain credit and yield markets said the longest portion of institutional due diligence is often not the credit model or the product wrapper, but operational risk: wallet controls, signing governance, custody arrangements, and whether the setup can withstand audit scrutiny and avoid hack-related failures.
Yuval Rooz said the fastest way to move tokenization forward inside a bank or financial institution is not to promise a transformation, but to run small deployments that produce explainable results and survive internal scrutiny.
“Take baby steps that prove we know how to use the technology and convert it into positive results for us or our clients” Rooz said. As meaningless as those steps may appear, they "build internal confidence that teams know what they’re doing and are thinking about financial returns, for both the organization and the client. That accelerates adoption.”
The final frontier: burying the tech
The near-term winners are not the firms promising a total reset. They are the ones adding utility to products that already carry trust, then expanding outward from there.
Over time, the clearest signal of real adoption may be that tokenization disappears as a headline. It becomes a means to an end: faster settlement, better collateral mobility, and always-on access.
“That’s really what matters, that the technology itself is just completely buried,” Jarvis said. “Now you just buy stocks, but they happen to be tokenized… you don’t really care about the technology in the background and where it sits and what chain it’s on… you just [know] that when you log into your app, you can see it.”
Jarvis’s point implies a shift in the adoption question. Once tokenization is invisible, success depends less on the rails themselves and more on the interface that normalizes them. That is where distribution becomes decisive.
Robert Crossley, head of industry advisory services at Franklin Templeton has argued that digital wallets are likely the distribution channel for the next generation of financial services. In that framing, tokenized assets do not win because people demand tokens. They win because wallets, platforms, and interfaces make programmable value economically usable, forcing traditional finance incumbents to meet customers there.
Payment behavior already points in that direction. Digital wallets and cards now account for 92% of preferred payment methods, while cash has fallen to a historic low of 7%, according to Billtrust’s 2025 Gen Z and Digital Payments Study.
Regulation: the next big unlock
But the scramble to distribute tokenized assets at scale will remain constrained until regulation catches up. “This is going to be a huge tipping point in the industry,” Bayston said, describing the watershed moment for mass adoption as one where the SEC approves third-party distribution of digital asset securities.
Major crypto exchanges such as Binance, Coinbase, and others that have been on journeys to register securities-related activities are likely to be among the winners. “When there is a full-on third party distribution of digital asset securities, then you’re going to see actually a massive wave of tokenized real-world assets and securities coming forward on these exchanges,” he added.
For others, the next regulatory unlock could be just around the corner. Powell said there is “very strong expectation” the U.S. gets a market structure bill this year. “If you get that in place, then you get clear investor protections. You get capital requirements for offering, whether it be tokenized securities or other kinds of on-chain products,” he added.
Tying these threads together, it’s clear the market end-state is shaping up as a multi-rail ecosystem: stablecoins for open settlement and platform-level liquidity, tokenized deposits for regulated, bank-native settlement, and interoperability layers that connect them across venues and legacy infrastructure. That is why adoption looks more like evolution than revolution.
Originally published on Investing.com. Read the full article here.
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