Tokenization Doesn't Need More Assets. It Needs More Institutional Capital

For years, the tokenization conversation revolved around a simple question:

What assets can we put on a blockchain?

• Real estate.
• Bonds.
• Private funds.
• Art.

Almost every asset class has, at some point, been presented as the next frontier for tokenization. But as the industry moves beyond experimentation and into real-world deployment, that question is becoming less relevant.

Today, the market isn't short of assets that can be tokenized. It's short of assets that institutional investors are willing to allocate capital to. That may sound like a subtle shift, but it fundamentally changes how the industry should think about tokenization. Success is no longer measured by how many assets move on-chain. It's measured by whether those assets meet the standards required for institutional portfolios.

That was one of the strongest messages from Barton Lui, Director of Global Product Solutions at BlackRock, during REDeFiNE TOMORROW 2026.

His argument was straightforward: tokenization is not a standalone blockchain innovation. It represents the next evolution of capital markets—one that only succeeds when traditional finance and digital infrastructure mature together.

Blockchain Changes Ownership—Not Investment Quality

One of the biggest misconceptions surrounding tokenization is that putting an asset on-chain somehow makes it a better investment.

It doesn't.

A tokenized bond is still a bond. A tokenized money market fund is still a money market fund.

What changes is the wrapper—not the underlying asset.

Its credit quality, duration, expected return, and risk profile remain exactly the same.

That's why institutional investors still begin with the same questions they have always asked.

• Is this a quality asset?
• Does it fit our investment mandate?
• Does it improve our portfolio on a risk-adjusted basis?

Only after those questions are answered does tokenization become relevant. Tokenization is not the investment thesis. It's an additional layer of infrastructure.

"Bringing an asset on-chain doesn't magically change the profile of that asset." 

— Barton Lui, Director of Global Product Solutions, BlackRock 

Tokenization Is Improving Markets, Not Assets

If tokenization doesn't improve investment returns, why are firms like BlackRock investing so heavily in it?

Because tokenization isn't changing what investors own. It's changing how financial markets operate.

Today's capital markets still rely on infrastructure designed decades ago—from settlement and custody to fund administration and cross-border transfers. These systems work. But they're operationally complex, heavily intermediated, and often slower than modern financial markets require.

Blockchain introduces an opportunity to redesign that infrastructure.

• Faster settlement.
• Automated operational workflows.
• Programmable fund administration.
• More efficient collateral management.
• 24/7 asset mobility.

The value isn't digital ownership for its own sake. The value is a more efficient investment lifecycle.

Not Every Asset Should Be Tokenized

Another important takeaway from the discussion is that tokenization should never become the objective itself. The better question is: What problem does tokenization actually solve?

Simply putting an illiquid asset on-chain doesn't make it liquid. Corporate bonds, for example, still trade primarily over the counter. Wrapping them in tokens doesn't automatically create secondary market activity if investor behavior remains unchanged.

Liquidity comes from markets. Not from blockchains.

On the other hand, tokenized money market funds present a much stronger use case. Because investors move in and out of these products constantly, tokenization reduces operational friction while enabling entirely new functionality, such as using fund shares as yield-bearing collateral.

Tokenization creates value when it solves real market problems—not when it's added as another technology feature.

Before Institutions Invest, Markets Need Infrastructure

Issuing tokenized assets is only the beginning. Institutional participation requires a much broader ecosystem.

• Regulated market access.
• Institutional-grade custody.
• Secure wallet infrastructure.
• Governance frameworks.
• 24/7 operational capability.
• Internal blockchain expertise.

Above all else, it requires regulatory clarity.

Markets such as Hong Kong and Singapore have spent years building licensing regimes, custody standards, and digital asset frameworks that give institutions confidence to participate. Without that foundation, even the best technology struggles to scale.

Tokenization Is Becoming a Capital Markets Upgrade

Perhaps the clearest signal from BlackRock's perspective is that tokenization is no longer a crypto-native story. Its future depends on 

• Banks.
• Asset managers.
• Exchanges.
• Custodians.
• Fund administrators.
• Payment infrastructure providers. 

In other words, the institutions that already operate today's financial system.

Rather than replacing traditional finance, blockchain is increasingly becoming another layer of financial infrastructure. That convergence is already visible through tokenized money market funds, tokenized deposits, regulated stablecoins, and institutional digital asset products entering the mainstream.

The future of tokenization won't be defined by how many assets move on-chain. It will be defined by how much institutional capital follows.

SCB 10X Perspective

Early success in tokenization was measured by issuance.

How many assets could be tokenized? How many products could be launched? That metric is becoming less meaningful.

The next phase will be defined by a different standard: whether tokenized assets meet the same requirements institutional investors apply everywhere else—strong fundamentals, robust infrastructure, regulatory certainty, and seamless integration into existing investment workflows.

Ultimately, tokenization doesn't need more assets. It needs markets that institutions trust enough to allocate capital into at scale.

Watch the full session here: https://youtu.be/5vTVMq6-QEI?si=2ugnbB8GxvVyRpRB