The Evolution of Tokenization: A New Era for Advisors

In this edition, Marcin Kazmierczak from Redstone explores the evolution of tokenization, from concept to allocation. Then, in 'Ask an Expert,' Kieran Mitha addresses investor questions about tokenized investments. The tokenization landscape is shifting, with companies like BlackRock, Franklin Templeton, and Fidelity Investments launching blockchain-based products. However, the real challenge lies in compliance, identity, transfer rules, sanctions, and lifecycle management. RedStone's research team has released the Tokenization & RWA Standards Report 2026, examining how these systems are being built. For issuers, the most critical choice is not which blockchain to use, but where to place the compliance rules. Compliance can be built into the token, managed outside the token, or enforced at the network level, each with its pros and cons. This decision directly affects how an asset behaves, determining its ability to move across chains, integrate with DeFi protocols, and serve as collateral. Institutional capital is moving on-chain, with deposits of tokenized real-world assets in DeFi lending protocols surpassing $840 million. The transition from theory to practice is evident in how tokenized assets are used in lending markets. For advisors, this reframes the role of tokenized assets, which are not just wrappers around existing products but can become productive collateral, generating additional yield and participating in broader strategies. Credit risk is becoming explicit, with emerging DeFi risk ratings frameworks introducing continuous, on-chain risk assessment. However, some structural gaps remain, such as corporate actions relying on off-chain processes and illiquid assets not being fully compatible with DeFi standards. Tokenization will continue to scale unevenly until these gaps are addressed. In 'Ask an Expert,' Kieran Mitha discusses the need for tokenization to integrate into existing financial systems, regulatory clarity, and institutional confidence. He also addresses misconceptions surrounding tokenized assets, such as the assumption that tokenization automatically creates liquidity. Tokenization is emerging as a catalyst for bringing younger generations into the market, offering a more digital and flexible investment experience.