The Evolution of Tokenization: From Concept to Mainstream

In this edition, Marcin Kazmierczak from Redstone explores the evolution of tokenization, shifting from a concept to a portfolio allocation. Then, in 'Ask an Expert,' Kieran Mitha addresses investor questions about tokenized investments. The trend of tokenization is gaining momentum, with major companies like BlackRock, Franklin Templeton, and Fidelity Investments launching real products on the blockchain, including Treasury funds and private credit strategies. The key challenge lies not in the technology to create tokens, but in the decisions on 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 crucial choice is not which blockchain to use, but where to place the compliance rules. Compliance can be built into the token, managed outside using tools like whitelisting, or enforced at the network level. Each method has its pros and cons. 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, with investors posting tokenized assets as collateral, borrowing against them, and re-deploying the capital. For advisors, tokenized assets are not just wrappers around existing products but can become productive collateral, generating additional yield and participating in broader strategies. Credit risk is evolving alongside DeFi strategies, with emerging risk ratings frameworks introducing continuous, on-chain risk assessment. However, some structural gaps remain, such as corporate actions relying heavily on off-chain processes and illiquid assets not being fully compatible with DeFi standards. Until these gaps are addressed, tokenization will continue to scale unevenly. In 'Ask an Expert,' Kieran Mitha discusses what needs to happen for tokenization to become a standard layer in global capital markets, the most overlooked risks or misconceptions surrounding tokenized assets, and how tokenization can open the door to new types of investments for retail investors.