Ask why an institution should tokenize an asset, and the answer usually arrives in the language of convenience: settlement around the clock, lower operational costs, access to global investors.
These are real benefits. They are also the least interesting part of what tokenization can do, and leaning on them undersells the technology.
The convenience framing has a credibility problem, too. If the whole pitch is that an existing asset moves a little faster on a new rail, a sober institution is right to ask whether the effort is worth it. Often it isn’t. Understanding why requires looking at what most of the tokenized market actually looks like today.
Most of what gets called tokenization today is a wrapper: a token that functions as a digital receipt for an asset still custodied, redeemed, and administered offchain. The chain improves distribution and visibility at the margin. It does not change how the asset works. And it describes the overwhelming majority of the market: of the assets Pantera Capital scored in its State of Tokenization report, 77.6 percent remain in what it calls the “wrapper” stage, within a market of 593 tracked assets worth roughly $320 billion.
One way to picture this stage: tokenization is still in its “newspaper-on-a-website” phase. Early internet media simply copied printed articles onto web pages. Delivery improved and reach expanded, but the product was identical; the same thing on a new distribution channel. What eventually moved the internet forward wasn’t faster newspapers, it was formats that couldn’t exist in print at all. Tokenized markets are at the equivalent point. The technology has proven that assets can be represented and distributed onchain. It has not yet produced many instruments that are genuinely different because they live there.
This is the part worth being honest about. Take a fund or an ETF that already trades smoothly on a major exchange. Tokenize it, and you gain continuous settlement and broader reach. Useful, but incremental, and not enough, on its own, to justify rebuilding the operational and compliance stack around a new asset form.
There is a deeper limit, as well. Better distribution does not manufacture demand for a weak asset. If the underlying instrument is unattractive or illiquid offchain, putting it on a blockchain will not fix that. Tokenization is best understood as an infrastructure upgrade, not a substitute for asset quality. Which is exactly why the wrapper-only approach disappoints: it spends real effort to deliver a marginal gain on an asset that was already working.
The pattern shows up even in the category furthest along. Tokenized US Treasuries have grown to roughly $12 billion, yet most still depend on custodian-mediated redemption and offchain ledgers. The leading real-world-asset use case is still mostly wrappers.
The transformation lies elsewhere.
Three shifts separate genuine onchain infrastructure from a digital receipt.
A conventional security arrives as a fixed bundle: principal, coupon, credit risk, and governance rights packaged together. Onchain, those components can be separated and traded independently, closer to how Treasury strips work, but extendable across asset classes.
An investor could hold a stream of cash flows without the underlying credit exposure, or the reverse. Instruments like these are structurally impossible without programmable infrastructure. This is not the same asset moving faster; it is an asset that legacy systems cannot build.
In traditional markets, staying compliant is expensive and largely human: whitelists, KYC routed through intermediaries, a transfer agent maintaining ownership records by hand. None of those rules disappear when an asset moves onchain. What changes is where they live. When eligibility, jurisdiction, and ownership checks run inside the asset itself and are enforced at every transfer, the cost of running a regulated market falls sharply. The legal framework stays the same, but the cost of complying with it drops.
A large pool of capital already lives onchain, held by crypto-native funds, onchain treasuries, and individual holders who do not participate meaningfully in traditional capital markets. The scale is already substantial: stablecoins alone account for roughly $293 billion, about 92 percent of all tracked tokenized value, moving continuously across onchain applications that traditional distribution channels never reach. That capital is reached through composability, not through broker-dealer networks. An asset built to operate natively onchain gains access to demand that simply did not exist for that issuer before.
Here is the catch, and it is the reason “just tokenize it” produces wrappers. Each of those three shifts depends on infrastructure that most tokenization efforts skip.
Compliance can only become code if there is a shared way for systems to express and verify it with observable compliance, consistent asset data, and verifiable settlement. That is the role of open standards. OpenAssets contributes to OTAS, the Open Tokenized Asset Standard, developed under the Linux Foundation Decentralized Trust, which defines how tokenized systems should behave externally so they can interoperate and be audited across institutions, without forcing everyone onto identical internal infrastructure.
Maintaining regulated ownership records onchain requires more than a smart contract. Tokenized securities still need a registered transfer agent to keep the shareholder record, administer transfers, and preserve auditability within established legal frameworks. OpenAgent is built for exactly this: bringing transfer agent functions into tokenized markets so regulated assets can operate on modern rails without losing the governance institutions depend on.
And making these assets useful across venues – settling, moving, composing – depends on interoperability between systems that were never designed to talk to each other. The marginal gains of a wrapper require none of this, which is precisely why so many issuers stop there. The transformative gains require all of it.
The wrapper market is not a failure. In many cases it reflects what issuers and regulators are ready for today, and reaching even a basic wrapper means rebuilding compliance, custody, and registration around a new asset form. It is a foundation. The risk is mistaking the foundation for the building.
So the useful question is no longer whether an asset has been tokenized. Nearly everything can be. The question is how much of its lifecycle has actually become programmable, auditable, and natively onchain, because that is where tokenization stops being a faster version of the old system and starts being infrastructure institutions can build on.
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Disclaimer: This document is provided for informational purposes only and does not constitute legal, tax, regulatory, accounting, or investment advice. Any figures or projections are sourced from publicly available research. No representation or warranty is made as to the accuracy or completeness of the information. Readers should obtain independent professional advice before making any decision based on this content.