Tokenization’s Evolution: How Crypto is Changing the Game for Advisors

Crypto for Advisors: Tokenization’s evolutionCoinDesk Indices

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I’ve been following the progress of tokenization for a while now, and Redstone’s Marcin Kazmierczak just laid out a really clear picture of how it’s moving beyond just being a cool idea. He’s explaining how we’re actually starting to *use* it to distribute tokens – basically, getting them into the hands of investors like me. It’s going from theory to actual allocation, which is a big step!

Then, in “Ask an Expert,” Kieran Mitha answers investor questions about tokenized investments.

– Sarah Morton

Where Tokenized Assets Are Today

Tokenization is becoming a reality, with actual assets being distributed. The focus is now shifting to how these digital assets perform within investment portfolios and the opportunities they create.

Your clients are likely starting to inquire about tokenized assets, and interest in this area is only going to grow.

Over the past year and a half, major financial firms like BlackRock, Franklin Templeton, and Fidelity Investments have started offering real-world financial products directly on the blockchain, including options for managing treasury funds and private credit. This is attracting investor attention, as the growth in this area is clear and easy to follow. Essentially, traditional investments like bonds, private credit, and money market funds are now available on the blockchain, cutting out the usual middlemen and speeding up transactions significantly.

That summary is mostly accurate, but it does not tell the whole story.

Creating the technology for tokens isn’t the hard part. The biggest challenges come after, dealing with things like legal compliance, verifying identities, how tokens can be transferred, avoiding sanctions, and managing them over time. These are the areas where projects often get stuck, and where the industry is currently focused.

Last month, RedStone published a report called ‘Tokenization & RWA Standards 2026,’ detailing the practical development of tokenization and Real World Asset (RWA) systems.

The compliance question is an architecture question

When it comes to digital assets, the key decision for companies isn’t *which* blockchain to build on, but *where* to enforce the rules that keep things legal and secure.

You can build compliance directly into a token, using smart contracts to automatically enforce rules with each transaction. Alternatively, compliance can be handled separately, like by creating approved lists of users. A third approach is network-level enforcement, where the blockchain itself determines which transactions are valid.

Each method fixes one issue but creates another.

Identity verification structures for tokenized assets, source: Tokenization Standards Report

Embedding compliance rules directly into a token offers precise control, but reduces adaptability. For instance, changes to a sanctions list could necessitate a contract upgrade, transforming a simple policy update into a complex technical process. Handling compliance separately from the token allows for more flexibility, but introduces reliance on third parties and potential risks if those parties fail to maintain security. Implementing rules at the network level simplifies token creation, however, it can restrict the asset’s ability to be transferred to other blockchains or integrated with different systems.

As a researcher in this space, I’ve found that how a token is designed isn’t just a technical detail – it fundamentally impacts its functionality. Specifically, it dictates whether an asset can be transferred between different blockchains, work seamlessly with established DeFi platforms like Morpho or Aave, and even be used as collateral for loans. I’ve observed that two funds holding the same assets can perform drastically differently solely based on this one architectural choice.

Institutional capital is already moving on-chain

We’re really seeing the power of digital assets become clear in lending, where the ideas behind them are now being put into action.

As an analyst, I’ve been tracking the growing trend of tokenized real-world assets being used in DeFi lending, and it’s now exceeded $840 million. What’s interesting is that much of this activity follows a pattern we’ve seen before: investors are putting up these tokenized assets as collateral to borrow funds, and then reinvesting those borrowed funds – frequently back into the original asset. While the technology is new, the underlying strategy isn’t. It’s essentially a digital version of traditional capital efficiency techniques, but it’s happening much faster, at a lower cost, and with fewer intermediaries than we’re used to seeing in traditional finance – no prime broker needed.

How investors allocate these assets is increasingly reflecting broader market trends.

One popular platform saw a significant drop in tokenized Treasury investments, while investments in tokenized gold increased dramatically during the same time. This shift closely mirrored changing expectations about interest rates, demonstrating how institutional investors are using blockchain technology to react to economic trends.

This changes how financial advisors should view tokenized assets. They’re not just digital versions of traditional investments. When structured correctly, these assets can actually *earn* more returns and be used in a wider range of investment plans, all while still being held within a client’s portfolio.

Credit risk is becoming explicit

With digital assets increasingly used in lending and more complex financial strategies, the types of credit risks are also changing, especially with innovations like ‘looping’ in DeFi. New risk assessment systems, such as Credora, are starting to provide constant, publicly verifiable risk evaluations directly on the blockchain – a level of openness not usually found in traditional finance.

This changes how advisors evaluate investments, focusing less on what an asset *is* and more on how it performs during difficult market conditions and what dangers it presents. Easy-to-grasp ratings, using a standard A+ to D system, make building a portfolio that balances risk and potential return much simpler, which is drawing in more investors.

What remains unresolved

There are still some limitations in how things are built. Many company actions still happen outside of blockchain systems, and it’s not yet easy to use assets like private loans or property directly within DeFi.

Currently, tokenizing complex assets is taking much longer than simpler ones, creating an imbalance. Fortunately, the companies building these tokenization systems recognize this issue and are working on ways to speed up the process for everything.

Sanctions screening approaches in tokenized assets, source: Tokenization Standards Report

– Marcin Kazmierczak, co-founder, Redstone

Ask an Expert

Now that tokenization is expanding beyond testing and being used in real financial systems, what steps are necessary to establish it as a common component of worldwide financial markets?

Tokenization gains widespread acceptance when it works *with* current financial systems, not against them. The key is making different blockchains, asset holders, and traditional financial systems able to connect and share assets easily.

Clear rules and regulations are just as important. Financial institutions need to be sure about ownership, secure transactions, and how to follow the rules before they invest heavily in this area. We’re starting to see some progress, but widespread adoption will happen when tokenized assets become as easy to use, trade, and trust as traditional investments. Once that happens, tokenization won’t be seen as something new or experimental – it will just be the standard way modern markets operate.

Q:What are the most overlooked risks or misconceptions surrounding tokenized assets today?

A common mistake is thinking that breaking down assets into tokens instantly creates a market for them. That’s not true. Tokenization just makes assets easier to access. For instance, you could divide a property into thousands of digital shares, but if nobody is buying or selling, those shares won’t trade easily.

The market is still very new, which presents another hurdle. Because different platforms are creating separate systems, money and trading activity are spread out instead of concentrated in a single, easy-to-use market.

Technology is advancing rapidly, but the necessary support systems, rules, and investment haven’t kept pace. This difference between what’s theoretically achievable and what’s realistically usable is currently the biggest source of uncertainty.

Does breaking down assets into digital tokens create investment opportunities for everyday investors? And could this attract a new, younger generation to the stock market?

Tokenization is gaining popularity as younger, higher-earning individuals become more involved in managing their finances. Having witnessed rapid technological advancements, this generation naturally anticipates that financial systems will also modernize and adapt.

This way of thinking is leading more people to consider investments beyond the usual stocks and bonds. Tokenization could make it easier to invest in things like private companies and real estate, and offer a more modern, adaptable investment process.

It’s not simply that there are new investment options, but that these options are a better fit for what today’s younger investors expect. The financial world is becoming faster, more open, and easier to use – qualities this generation has grown accustomed to. This change will likely be key to getting them involved in investing.

– Kieran Mitha, marketing coordinator

2026-04-16 18:06