On May 8, 2025, SEC Commissioner Hester Peirce announced a groundbreaking proposal at the agency’s 31st International Institute for Securities Market Growth. She introduced a “regulatory sandbox” aimed squarely at tokenized securities. Under this conditional exemption, firms would be able to issue, trade, and settle tokenized securities using distributed ledger technology without immediately needing to register as a broker-dealer, clearing agency, or exchange.
Participation in this sandbox is not unrestricted. Firms are required to abide by a strong set of conditions designed to safeguard investors and uphold market integrity. They must offer full disclosures about platform operations, conflicts of interest, custody arrangements, and the unique risks of smart contracts. Maintaining comprehensive records, submitting regular reports, and remaining open to SEC examinations are mandatory. Adequate capital reserves are also required to ensure operations can withstand normal and stressed conditions.
The SEC intends to impose pragmatic limits on early participants. Caps on the number of tokenized assets, total trading volume, or participating investors will apply. However, if a firm shows strong compliance and investor protections, those caps can be raised over time. This tiered approach mirrors similar sandbox frameworks in jurisdictions like the UK’s Digital Securities Sandbox and Singapore’s Project Guardian, where regulators allow safe experimentation before scaling up.
Peer cryptographer Paul Atkins, speaking at the Crypto Task Force roundtable on May 12, emphasized that tokenization allows assets to be “smarter”—programmable, efficient, and transparent—in ways traditional securities cannot match. These innovations are precisely why the SEC views this sandbox as a measured step forward. It will help regulators test technology in action and adjust existing frameworks like Reg NMS, transfer agent requirements, and settlement rules accordingly.
Opponents within the SEC have raised concerns. Commissioner Caroline Crenshaw questioned whether public blockchains can securely handle scaling tokenized assets and whether instantaneous settlement might disadvantage retail investors. Nonetheless, the prevailing view at the agency leans toward supporting controlled experimentation, provided guardrails remain tight.
This conditional exemption represents a calculated regulatory shift. It does not rewrite the rulebook but introduces flexibility. Institutions gain legal clarity to explore tokenized assets, while the SEC gains transparency into how these innovations perform. Innovators receive a live testing ground, and investors get layered protections—making this one of the most significant developments in integrating traditional finance and decentralized finance.
Building on this regulatory foundation, the momentum behind real-world asset tokenization is now unmistakable.
Real-World Tokenization Projects Accelerating (2024–2025)
The surge of successful real-world tokenization projects over the past year demonstrates that this is no longer theory. Tokenization is transitioning from niche innovation to mainstream adoption, evidenced by rising total value locked (TVL) numbers and high-profile institutional involvement.
Securitize stands out as a pioneer. Since becoming the first SEC-registered blockchain transfer agent in 2019, it has facilitated an astonishing cumulative $4 billion in on-chain assets as of May 2025. This includes over $2.8 billion in BlackRock’s BUIDL Fund—an institutional treasury product live on-chain—and nearly $400 million in tokenized equity via Exodus, plus hundreds of millions more in private credit and institutional funds. This infrastructure is built at scale with backing from Morgan Stanley, BlackRock, and others.
Beyond Securitize, protocol-level efforts are gaining traction. MakerDAO’s real-world asset collateral vaults now back DAI with U.S. Treasuries and real estate loans. Ondo Finance issues tokenized bonds, and Centrifuge builds invoice-backed pools for small- and medium-sized enterprises. Maple Finance specializes in on-chain private credit. These initiatives demonstrate mature, real-world use cases spanning debt and credit markets.
The numbers are compelling. Total value locked across RWA protocols has exceeded $3 billion by June 2025, reflecting institutional capital committed far beyond speculative retail interest.
Meanwhile, major asset managers are actively experimenting. Franklin Templeton launched an on-chain U.S. government money market fund, tokenizing shares on Stellar and Ethereum. Société Générale issued a digital bond on Ethereum under European regulations. Goldman Sachs pilots tokenization in its Hong Kong sandbox. These efforts show a pattern: traditional finance giants are not only exploring but building and deploying tokenized structures.
This growth means institutions now have proof points. Tokenized real-world assets offer programmable features, faster settlements, and broader investor access. Regulatory pilot programs grounded in these projects demonstrate tokenization’s viability as an asset wrapper. Traditional finance firms are increasingly taking notice and engaging.
In practice, TradFi institutions looking to enter this burgeoning landscape must adopt a comprehensive and thoughtful market entry strategy.
Market Entry Strategy for TradFi Institutions
Stepping into the world of RWA tokenization is more than a checkbox for traditional financial institutions—it is a strategic expansion demanding a comprehensive, layered approach.
The first priority is building a compliance-first foundation. Institutions must align with the U.S. SEC’s conditional exemption criteria, ensuring registration, KYC/AML protocols, smart contract risk disclosures, custody segregation, regular audits, and minimum capital are all in place. European asset managers similarly need to engage with frameworks like MiCA and the UK’s FCA tokenization sandbox, which support innovation with clear guardrails.
In addition, advanced compliance tooling is essential. Developing or integrating digital identity and “Know Your Wallet” systems for wallet-level verification is crucial. On-chain credit scoring platforms like Goldfinch provide risk assessment capabilities, while real-time reporting tools such as Chainalysis or TRM Labs ensure transparency and transaction monitoring.
Choosing the right tokenization infrastructure is another key element. Platforms vary from ready-built SaaS solutions like Brickken, which has tokenized over $250 million across 14 countries under regulatory sandboxes, to institutional-grade layer-1 networks such as Mantra, designed with built-in KYC/AML controls. Ensuring interoperability via platforms supporting multi-chain access like Chainlink’s Cross-Chain Interoperability Protocol (CCIP) or Cosmos IBC expands access and liquidity across networks.
Partnering with custodians and infrastructure providers is pivotal. Established names like State Street (partnering with Taurus), Anchorage Digital, Fireblocks, BitGo, Copper, and Komainu are already enabling secure custody and tokenization capabilities. Collaborating with these firms ensures regulatory compliance and the trust institutions require to tokenize assets at scale.
Institutions should pilot tokenized issuances cautiously, starting with tokenized versions of core traditional finance products such as U.S. Treasuries, corporate bonds, real estate shares, or private credit. Projects like BlackRock’s BUIDL Fund on Ethereum and Franklin Templeton’s on-chain money market fund provide strong proof points. Pilot programs allow institutions to test settlement speed, liquidity depth, governance automation, and on-chain risk modeling without overcommitting resources.
Integrating with decentralized finance ecosystems for liquidity is vital because a token’s power depends on its liquidity. Collaboration with DeFi platforms to list assets in liquidity pools or hybrid decentralized exchanges, such as Ondo Finance’s RWA pools that combine tokenized bonds with stablecoins, enables real-time pricing and decentralized liquidity, offering flexibility and yield across platforms.
A coherent marketing and distribution strategy supports institutional entry. Emphasizing compliance rigor in communications through white papers, targeted webinars, and transparent dashboards showing performance, audit outcomes, and governance reports builds trust. Strategic regional rollouts tailored to compliance requirements—such as MiCA in EU countries, the UK’s FCA sandbox, and the SEC’s U.S. framework—ensure smooth market entry. Messaging should target institutional concerns: transparency, custody safety, interoperability, and yield enhancement.
Anticipating and overcoming challenges is necessary. Institutions should address counterparty exposure using on-chain credit risk frameworks like Goldfinch and mitigate smart contract vulnerabilities via code audits, insurance, and multi-signature controls. Preparing for fragmented global regulations requires engaging local counsel in key jurisdictions and closely monitoring sandbox terms regionally.
By intentionally building compliance structures, choosing flexible technology partners, piloting high-quality token issuances, tapping into DeFi liquidity, and executing smart marketing, traditional finance institutions can transition from skepticism to leadership in the RWA tokenization wave.
Case Studies: TradFi Meets Tokenization
The tokenization wave is now grounded in real-world deployments by some of the biggest names in finance. These case studies illuminate how traditional firms integrate on-chain infrastructure with rigor and scale.
One compelling success story comes from Franklin Templeton. In early 2025, the firm launched the Franklin OnChain U.S. Government Money Fund, a Luxembourg-registered UCITS fund running on the public Stellar blockchain. Institutions can mint BENJI tokens representing $1 NAV shares, with on-chain visibility delivered in real time across Europe’s regulated environment.
Initially deployed on Stellar, the fund later expanded to Ethereum, Polygon, Aptos, Avalanche, Arbitrum, Base, and Solana. This multi-chain strategy captures diverse DeFi liquidity and, by late 2024, amassed over $580 million in assets under management. Peer-to-peer token transfers enabled investors to exercise direct control over holdings, reducing middleman friction.
This deployment effectively bridges European regulatory rigor with blockchain automation. Investors benefit from instant settlement, transparent holdings, and lower operational costs while remaining within UCITS-compliant frameworks.
BlackRock also seized the opportunity. In March 2024, it launched the USD Institutional Digital Liquidity Fund, or BUIDL, on Ethereum. Securitize serves as the transfer agent and tokenization platform, with BNY Mellon facilitating digital-to-traditional market bridges. Qualified purchasers could invest starting at $5 million.
By July 2024, BUIDL surpassed $500 million in on-chain assets under management, growing rapidly across multiple blockchains including Ethereum, Polygon, Aptos, Arbitrum, Avalanche, Optimism, and Solana. In December 2024, Securitize proposed using BUIDL as collateral for the Frax USD stablecoin—offering deep liquidity and diversified yield exposure. The fund exceeded $1 billion in assets by May 2025, signaling strong institutional validation.
From Europe, Société Générale’s Forge platform issued a €10 million digital green bond on Ethereum under EU law in December 2023. This bond was among the first tokenized ESG-compliant debt instruments, backed by real-world green projects. It illustrates innovation at the intersection of ESG and tokenization, showing how debt issuance can become more traceable and automated via smart contracts.
These projects share critical traits: regulatory compliance is front and center; custody and transfer operations are blockchain-backed; multi-chain deployment ensures flexibility; and transparency drives investor trust. Tokenization is no longer experimental—it is woven into mainstream asset creation and management.
With these successes, challenges and regulatory uncertainties still require careful navigation.
Challenges and Regulatory Uncertainties
Before traditional finance institutions leap fully into RWA tokenization, they must navigate a complex web of technical and legal obstacles that do not neatly align with traditional finance paradigms.
One of the most pressing issues is fragmented regulation. There is no universal rulebook governing tokenized RWAs. Definitions of what constitutes a security, custody rules, AML/KYC requirements, and tax treatments vary significantly across jurisdictions. For instance, regulators in one European country might recognize a token as representing legal ownership, while another may view it as a contractual claim. This fragmentation increases legal expenses and launch time for multi-jurisdiction products.
Regulatory ambiguity often results in tactical hesitation. In the U.S., reliance on SEC enforcement actions and the Howey Test leaves token offerings in a gray area. In Europe, while frameworks like MiCA show promise, they remain in development, forcing cautious rather than bold expansion.
Technologically, blockchain systems face challenges in scalability, smart contract vulnerabilities, and interoperability. A mid-size DeFi platform lost $25 million in a 2024 exploit, illustrating how quickly these systems can falter, potentially dragging tokenized RWAs down with them.
Custody and asset trust frameworks are still evolving. Real-world assets require legal backing—such as paper deeds, registrations, and trust frameworks—while token holders expect on-chain control. Harmonizing these dual requirements is exceptionally difficult. Without clear legal chains connecting asset ownership to token control, courts may treat tokens as unsecured claims, making them vulnerable in bankruptcy proceedings.
Liquidity challenges also persist. While tokenizing government bonds attracts attention, more exotic assets like art or private credit remain niche. On-chain liquidity is limited and fragmented across chains, complicating asset exit strategies.
Overlaying these challenges is a trust paradox: traditional finance trusts legal systems, while decentralized finance trusts code. However, code cannot fully replicate legal nuance—smart contracts are immutable, yet legal orders can override them. Without governance frameworks reconciling smart code with judicial rulings, institutions risk unpredictable outcomes.
Addressing these challenges requires multifaceted solutions, including preemptive legal structuring under special purpose vehicles or regulated custodians, robust smart contract audits and insurance, interoperable technical standards like ERC-3643 or IBC, and active engagement with policymakers to push for regulatory harmonization.
Looking forward, the outlook for tokenized capital markets is both ambitious and transformative.
Future Outlook: Tokenized Capital Markets by 2030+
Tokenization of real-world assets is rapidly evolving into a transformative force in global markets. A 2022 Boston Consulting Group report projected that tokenized RWAs could reach $16 trillion by 2030. A revised April 2025 study, in collaboration with Ripple, extends that projection to $18.9 trillion by 2033, including stablecoins and deposits. Another BCG study with Aptos and Invesco forecasts tokenized fund assets under management climbing to at least $600 billion by 2030—a modest start compared to long-term potential, but a clear catalyst.
Industry intermediaries share similar optimism. Chainlink cites multiple forecasts ranging from $10 trillion to $16 trillion by 2030. In contrast, McKinsey’s 2025 report estimates $1 to $4 trillion by 2030 if current trends persist. The divergence reflects differing assumptions about regulatory progress and technology adoption speed.
Four powerful trends drive these projections. First, institutional adoption is accelerating. Early movers such as BlackRock, Franklin Templeton, and JPMorgan are rapidly building tokenized products. BlackRock’s BUIDL and Franklin’s Stellar money market fund have crossed $1 billion and $580 million AUM thresholds by mid-2025. Second, regulatory clarity and sandboxes worldwide—from the SEC’s U.S. sandbox to MiCA in Europe and MAS initiatives in Singapore—are carving out legal frameworks that reduce institutional friction.
Third, technological advancements in blockchain scalability, cross-chain interoperability, standardized token protocols like ERC-3643, and privacy-preserving tools such as zero-knowledge proofs are enabling seamless transactions, atomic settlement, fractionalization, and gated compliance—all crucial for real-world asset applications. Fourth, operational efficiency and liquidity gains promised by tokenization include 24/7 settlement, deeper liquidity pools, and fractional ownership. BCG estimates that mutual funds alone could save up to $100 billion annually through faster settlement, reduced fees, and enhanced collateral reuse.
Over the next decade, adoption will likely progress through three phases. The first phase, already underway, focuses on tokenizing money-market funds and bonds. The second will expand into private credit, structured finance, and real estate-backed instruments as secondary market infrastructure matures. The final phase may unlock illiquid sectors such as private equity, hedge funds, climate debt, and cultural assets for global participation.
Moreover, central bank digital currencies (CBDCs) and institutional stablecoins are poised to replace traditional dollar rails in tokenized transactions. For example, Hong Kong’s Project e-HKD+ explores tokenized money for asset settlement, while global central bank pilots signal programmable cash is on the horizon.
By 2030, trillions in on-chain assets, faster markets, smarter collateral, and global access to tokenized portfolios are likely. Traditional finance institutions that design their infrastructure now—focusing on custody, compliance, technology choice, and ecosystem partnerships—will position themselves to lead in a future where tokenized and on-chain assets are integral components of their managed inventory.
Building on this promising outlook, it is essential to summarize the key takeaways and strategic imperatives for institutions.
Seizing the RWA Tokenization Opportunity
What began as a regulatory experiment is rapidly becoming a strategic imperative. The SEC’s conditional exemption has unlocked a gateway for traditional finance institutions to pilot tokenized securities under clear compliance corridors. Regulators are no longer mere observers; they are participants shaping a more agile and transparent market.
Real-world deployments by Franklin Templeton, BlackRock, and Société Générale demonstrate that tokenization is more than concept—it is capital, scale, and multi-chain execution. Money market funds, bond offerings, and green debt are live and operational on public blockchains, generating institutional-grade assets measured in hundreds of millions and even billions of dollars.
Forecasts backed by Boston Consulting Group, Ripple, and Chainlink emphasize the magnitude of change. Tokenized assets could grow from roughly $600 billion today to between $9 trillion and $19 trillion by the early 2030s. Even conservative estimates by McKinsey, at $2 to $4 trillion by 2030, represent a seismic shift compared to today’s sub-$150 billion public tokenized value.
This transformation is not hype but is underpinned by institutional readiness, cross-chain interoperability, programmable compliance, and real efficiency gains. The questions now focus not on if tokenization will scale, but how fast and at what scale.
For traditional finance institutions, the message is clear: infrastructure choices made today matter immensely. Custody, compliance frameworks, smart contract security, regulatory mappings, and multi-chain strategy are essential first steps toward building a token-native business model.
In a future where trillions of assets move as tokens, early adopters will hold multiple advantages. They will lead the development of tokenized liquidity pools, shape cross-border settlements, influence compliance standards, and capture first-mover yield opportunities, all while maintaining trust through transparency and governance.
This is the moment. Tokenized capital markets are no longer theoretical—they are unfolding. Traditional finance institutions ready to act decisively will not simply adapt to the future of finance—they will define it.
