Tokenization is revolutionizing the way assets are managed and traded in global markets, according to a new report titled “Real World Assets: A Practitioner’s Guide” co-authored by Libeara, a tokenization platform backed by Standard Chartered Ventures. The report emphasizes that tokenization goes beyond simply digitizing assets; it involves creating programmable, composable assets that can settle instantly on blockchain rails.
Unlike traditional financial infrastructure, where assets are fragmented across custodians and clearinghouses, tokenized assets exist as bearer instruments that can be seamlessly transferred, swapped, or integrated into smart contracts in real-time. This composability opens up new possibilities, such as atomic swaps between tokenized Treasuries and stablecoins, as well as using tokenized loans as collateral within decentralized finance (DeFi) systems.
The report traces the evolution of tokenization through three phases. It begins with Bitcoin, which introduced digital scarcity but was too volatile for mainstream financial use. The second phase ushered in Ethereum’s smart contracts, enabling programmable finance but relying on volatile crypto-native collateral. The third phase, starting in 2020, combines stablecoins and real-world assets, extending programmable finance to include Treasuries, money market funds, and private credit.
This progression has set the stage for institutional adoption, with stablecoins demonstrating the viability of tokenized money and tokenized RWAs bridging capital markets with blockchain infrastructure. Established financial firms are increasingly participating in this space, further driving market growth.
Despite being relatively small compared to traditional markets, tokenized funds are experiencing rapid expansion. Tokenized Treasuries and MMFs are following a growth trajectory similar to that of early ETFs, with the potential to reach trillion-dollar levels in the coming years. Factors driving this adoption include positive interest rates, the success of stablecoins, institutional experimentation, blockchain scalability improvements, and clearer regulatory frameworks.
Case studies from major asset managers such as Franklin Templeton and BlackRock showcase institutional credibility in the tokenized funds space. Regulated tokenized funds operating across multiple blockchains and attracting significant assets demonstrate the market’s potential. Global ratings agencies are now providing investment-grade ratings for tokenized funds, further solidifying their credibility.
Overall, the report suggests that tokenized funds are poised to surpass the growth trajectory of ETFs, signaling a significant shift in the financial landscape. As tokenization continues to gain traction, the future of asset management and trading looks increasingly decentralized and efficient.