Everyone agrees on tokenization. So what’s holding it back?

Spend five minutes reading digital asset news and you’ll come across another announcement about tokenized securities. Asset managers are launching tokenized funds. Banks are piloting blockchain-based settlement. Regulators are speaking positively about digital assets. Depending on whose forecast you believe, tokenized real-world assets could represent anywhere from a few trillion dollars to more than $8 trillion by the end of the decade.

But if tokenization is so inevitable, where’s the adoption?

Despite the excitement, tokenized securities still account for only a tiny fraction of global capital markets. Most activity remains confined to pilot programmes and limited institutional use cases. The technology is here but the activity is not.

That’s perhaps the biggest change in the conversation over the past year. The debate is no longer about whether tokenization has value—there is growing consensus that it does. Blackrock CEO Larry Fink has described tokenization as the next evolution of market infrastructure, capable of reducing settlement times, lowering operational costs and expanding access to investment opportunities. SEC Chair Paul Atkins has similarly argued that tokenization should be viewed not as a new asset class, but as a more efficient way of issuing and trading existing securities. The conversation has shifted from whether tokenization works to how it can be implemented at scale.

Capital markets run on trusted intermediaries: central securities depositories, custodians, exchanges, clearing houses and transfer agents. Until those institutions integrate tokenization into the core processes of issuance, settlement and custody, tokenized securities will remain an innovation sitting alongside the existing system rather than transforming it.

The DTCC’s plans to launch a tokenization platform for Russell 1000 equities, major ETFs and US Treasuries demonstrates where the market is heading. Working alongside more than 50 financial institutions, the initiative is designed to integrate tokenized assets into the existing market infrastructure rather than create a parallel ecosystem. That’s a critical distinction. Tokenization will only achieve scale when the organisations that provide the plumbing of capital markets decide that digital assets should become part of the plumbing itself.

Regulatory certainty is the other half of the equation. Whether through the CLARITY Act in the US or equivalent legislative frameworks elsewhere, institutions need legal certainty before committing significant capital and operational resources. But legislation alone will not create a tokenized securities market.

The reality is that tokenization will only become mainstream when law and infrastructure evolve together. The technology already exists. The economic case is increasingly accepted.

Tokenization has largely won the technology argument. Now it has to win the infrastructure argument.