Tokenization’s Second Act: Making Real‑World Assets Composable

Tokenization has moved beyond proof‑of‑concept issuance: custodians, issuers and pilots have shown real‑world assets can be minted and transferred on ledgers. But to unlock new economic utility, tokenization must stop being a cosmetic registry and become a native lifecycle platform where issuance, transfer, compliance and reporting all operate inside a single programmable environment. Embedding investor rights, enforcement logic and real‑time reporting into smart contracts collapses reconciliation windows and replaces episodic audits with continuous verification, enabling atomic delivery‑versus‑payment flows and auditable finality. That rearchitecture makes asset tokens functional primitives that can immediately plug into lending, automated treasury management, liquidity protocols and market‑making stacks, rather than passive wrappers that require off‑chain coordination. Practical adoption will be driven by hard incentives—efficiency, auditability and scalable operations—not ideology; institutions will move when the business case for lower reconciliation cost, faster cash rotation and clearer audit trails is incontrovertible. Yet three technical constraints remain decisive: sustained transaction throughput, predictable latency and finality, and transaction‑ordering primitives that resist extractable‑value extraction. Those shortfalls have already encouraged middleware and well‑capitalized firms to capture execution advantages—stablecoin issuers, custody providers, sequencers and bridges are aggregating fees and distribution, increasing lock‑in and concentration risk. Regulators and supervisors are responding by reframing tokenization as a question of containment and integration—bank‑anchored tokenized deposits and constrained issuance models aim to preserve depositor protections and visible reserve placement, but such choices also risk driving innovation into private rails or offshore venues. Market coalitions and exchange pilots, notably in Singapore, are attempting to prove institutional‑grade, continuous tokenized markets by focusing on atomic on‑chain delivery‑versus‑payment, transaction‑level programmable compliance and modular architectures that unify custody, clearing and execution. Complementary infrastructure—MPC custody, cross‑chain messaging, agent‑capable tooling and custody‑integrated yield—will be necessary for tokens to be redeployable across venues. The near term will likely be bifurcated: experimental activity and retail flows on public chains, while high‑volume institutional flows concentrate on compliance‑integrated, high‑performance rails unless base layers are redesigned to offer sub‑second finality and neutral ordering. Stablecoins already demonstrate the scale and user expectations for programmable settlement, reinforcing the case for tokenized money as the plumbing for composable assets. If institutions coordinate on standards, governance and protocol upgrades, tokenized assets can become reusable infrastructure that compresses frictions and expands liquidity use cases; absent that coordination, tokenization risks replicating today’s concentration and gatekeeping in a new technical form. Historical patterns suggest a slow march to critical mass followed by rapid adoption once plumbing and legal frameworks align—those who invest early in reusable, interoperable infrastructure will capture durable advantage.