The Evolution of Tokenization: A New Era for Advisors

In this newsletter, Marcin Kazmierczak from Redstone explores the evolution of tokenization, from concept to portfolio allocation. Then, Kieran Mitha answers investor questions about tokenized investments in 'Ask an Expert'. Tokenization is moving from concept to allocation, and what matters now is how these assets fit into portfolios and what they enable. Over the last 18 months, companies like BlackRock, Franklin Templeton, and Fidelity Investments have launched real products on the blockchain, including Treasury funds and private credit strategies. The real test for tokenization comes later, with decisions on compliance, identity, transfer rules, sanctions, and lifecycle management. The compliance question is an architecture question, and for issuers, the most important choice is not which blockchain to use, but where to place the compliance rules. Institutional capital is already moving on-chain, with deposits of tokenized real-world assets in DeFi lending protocols surpassing $840 million. For advisors, this reframes the role of tokenized assets, which are not simply wrappers around existing products, but can become productive collateral, capable of generating additional yield and participating in broader strategies. Credit risk is becoming explicit, and emerging DeFi risk ratings frameworks introduce continuous, on-chain risk assessment. Some structural gaps remain, but creators of tokenization frameworks are aware of these limitations, and soon, we should see solutions addressing these gaps.