Context and Chronology

A senior investment executive at Bitwise has flagged a persistent valuation gap between public sentiment and the actions of major financial firms, arguing that institutional builds on blockchain infrastructure are advancing faster than the market recognizes. He cites a string of recent initiatives from top asset managers and banks that move core functions—settlement, custody, and product engineering—onto distributed ledgers, and he links those moves to a much larger potential market for tokenized instruments.

To ground the scale: Bitwise compares the tokenized real‑world asset market near $20B today against traditional pools under management—ETFs (~$30T), public equities (~$110T) and bonds (~$145T)—to argue there is material upside even at tiny share gains. Independent tallies from industry trackers complement that view by showing rapid, if still small, traction in tokenized securities: aggregate on‑chain tokenized equities were approximately $963M by January 2026, with a highly concentrated supply (one provider controls more than half of outstanding tokenized shares).

Concrete industry developments bolster Bitwise’s thesis: public issuers and custodians are piloting ledgered settlement (DTCC pilots), broker platforms have tokenized large stock sets (Robinhood’s near‑2,000 U.S. stocks amounting to roughly $17M on‑chain), and asset managers and trading desks are experimenting with deposit tokens, custody‑integrated yield and restaking stacks. Notable capital allocations—such as a reported $170M restaking deployment by a multi‑party institutional stack—signal that some institutions are preparing balance‑sheet allocations to on‑chain instruments rather than treating them as pure speculation.

But other reporting tempers a straightline adoption story. Technical constraints remain the principal gating factors: sustained transaction throughput, predictable low latency and finality, and transaction‑ordering primitives (and the extractable value they enable) limit how reliably on‑chain venues can support professional market‑making and consistent price discovery. These shortfalls are already encouraging investments in sequencers, validators and private networking that can reintroduce centralized ordering advantages—and thereby concentrate fee capture in middleware, bridges and custody providers.

Regulatory developments are likewise double‑edged. Recent clarifications (including SEC guidance distinguishing issuer‑originated token models and highlighting custody and counterparty insolvency risks) have nudged market design toward custody‑integrated approaches, which reduce legal ambiguity but also favor custodians and regulated platforms. Pilot programs in the EU, Singapore, Hong Kong and other hubs are creating regional authorization paths that attract balance‑sheet commitments, while U.S. policy scrutiny channels design toward comparable surveillance and custody standards.

The practical implication is a bifurcated near‑term topology: retail and experimental flows will likely remain on public chains, while high‑volume institutional flows may concentrate on compliance‑integrated, higher‑performance rails and middleware unless base‑layer protocols deliver order‑of‑magnitude improvements in throughput and finality. That split could produce winner‑take‑most dynamics for firms that standardize token schemas, secure regulatory sign‑off, and control liquidity‑routing interfaces—but it also raises concentration and interoperability risks that could constrain the open‑layer total addressable market.

For asset allocators, Bitwise’s mispricing argument retains force but is conditional: broad exposure to compliant tokenization stacks buys optionality on which settlement topology wins, while single‑protocol or single‑provider bets face concentration and execution risks. If integrations and regulatory clarity accelerate within 12–24 months, fee pools tied to minting, custody, staking and liquidity routing could materialize faster than current public pricing implies; absent that progress, tokenization may scale more slowly and cluster around a few platforms.