Gone are the days when tokenization was just a niche concept. This has now become a reality in capital markets in billionsthe issue has shifted from adoption to architecture. Can the industry coordinate quickly enough to transform a slew of isolated pilots into a single composite market? Today, the answer is no, and coordination gaps continue to drain value through repeated consolidations, stranded liquidity, and regulatory drag.
Tokenization promises to solve inefficiencies
Ten years of experimentation has left a maze of base layer (L1), layer 2, and token standards that often don’t speak the same language. Equity tokens minted on one chain rarely settle natively against collateral on another chain. Liquidity is fragmented, market makers must maintain multiple inventories, and the same asset is packaged in three different ways. It functions like a walled courtyard, away from the unified market place.
Tokenization promises faster settlement and wider access. Instead, companies are building parallel silos, introducing back-office friction into new substrates. Regulators see this repetitive behavior and balk. Investors face basis risk in different packages. The issuer pays twice for the audit and consolidation. Growth continues, but at a discount to what technology can offer.
Unified market structure
There is no doubt that assets must run across chains. Interoperability is built into the design from day one. Encouragingly, both existing railways and emerging protocols are attempting to perform this task. For example, SWIFT has stated that it Message networks can coordinate Tokenized value transfer across multiple public and private chains reduces one of the biggest frictions of institutional scale. Regulators are more likely to support systems that reuse controls they already know.
At the infrastructure level, new interoperability protocols are solving the same challenges across different architectures. linked Cross-chain interoperability protocol (CCIP) provides secure cross-chain messaging and programmable token transfer, allowing liquidity and compliance logic to move seamlessly between networks. Wormhole enables verifiable operations through a decentralized custodial network that validates cross-chain messages, while LayerZero connects cross-chain applications through a full-chain messaging framework built on lightweight nodes and a configurable trust model. Each approach solves the same problem: making tokenized value portable and composable without sacrificing security or regulatory confidence.
Let demand dictate the location of liquidity pools, independent of initial alliance deployment. Cross-chain liquidity pools and intelligent order routing can direct capital flows to the best places while maintaining a unified position risk record. Marketplaces should set measurable goals: cross-chain fill rates above 99%, sub-minute finalization between domains, and coordination without manual interruptions.
Second, standardization of assets and identities. A unified, open token standard for regulated assets should include only the essentials—transmission controls, role-based permissions, and legal enforcement hooks—while remaining compatible with the most common blockchain formats (i.e., ERC-20, ERC-721, and ERC-1155). Emerging frameworks such as ERC-3643 and ERC-7943 are early efforts to encode compliance and interoperability for real-world assets, but they must remain modular, neutral, and open to extension so that issuers can evolve without destroying composability.
Pair standardized assets with portable identities. Verifiable credentials and on-chain proofs should be carried with investors, ensuring KYC and eligibility checks are not restarted at every venue. This is the foundation of scalable compliance: identities and permissions move with the holder, not the platform.
Finally, synchronize the internal supervision of assets. Regulators expect familiar outcomes—eligibility checks, sanctions screening, audit trails—but with greater transparency and observability. European Union DLT pilot system Shows how to develop a harmonized infrastructure within existing securities law to enable innovation under MiFID II regulation while maintaining market integrity.
Bake these controls directly into the token. The ruleset can define who can hold or transfer the instrument, in which jurisdictions, and when forced transfers are legal. This approach shortens compliance cycles and leverages shared messaging standards and minimal token primitives that any venue can implement. Singapore Guardian Plan Banks and asset managers are testing regulated tokenization on open infrastructure under regulatory oversight, reflecting this vision.
Where is Game of Thrones now?
this Increase in Tokenized Cash Equivalents Showing interest: Assets in tokenized Treasury products surge as institutions seek intraday settlement and programmatic collateral. Institutional players are no longer debating whether tokenization is happening; they are fighting over where it settles and how it moves. Custodians want to be the universal custodian layer. Market Infrastructure wants to be a neutral center for cross-chain messaging. Asset managers hope to turn tokenized funds into the default source of cash for cryptocurrency-native activities. Every move is rational; only coordination can scale.
Consider signals from mainstream finance. Citibank estimate Tokenized digital securities could reach $4 to $5 trillion by 2030. Boston Consulting Group project As much as $18.9 trillion in illiquid assets could be tokenized by 2033. Think of these numbers as a map showing where capital is intended to flow if the trajectory aligns. Projects that trap assets on a single chain will miss out on these flows. Regulatory attitudes are changing in the same direction. Central banks and industry groups are testing how to use existing messaging standards to move tokenized value across the network. These are coordinated stakes that are more important than grabbing headlines. They reward open designs that keep compliance portable.
The important scoreboard: portability and trust
The next phase of tokenization is a race to make assets portable and trustworthy on-chain. Portability reduces the cost of capital by exposing the issuance to broader liquidity and deeper collateral markets. Trust reduces legal friction, speeds startups, and opens institutional balance sheets to programmable finance. Together they create network effects that single-chain strategies cannot replicate, in the form of tighter spreads, lower collateral discounts and faster time to market.
A key enabler of this evolution is the emergence of atomic settlements, allowing cross-chain transactions to be fully executed or not executed at all. Early implementations of atomic swaps have demonstrated how simultaneous settlement eliminates counterparty risk and reduces reliance on intermediaries for finality. As interoperability frameworks like Chainlink CCIP, Wormhole, and LayerZero mature, they will bring these mechanisms into regulated environments, transforming decentralized liquidity into a unified market structure that allows assets and collateral to move seamlessly across the ecosystem without breaking compliance or auditability.
For policymakers, the way forward requires prioritizing infrastructure rather than siled issuance. The focus must shift to interoperable rails, open token standards and portable identity frameworks built on verifiable credentials. Success will be measured by new goals: cross-chain settlement rates, shared liquidity depth, atomic swap efficiency, and reduced compliance times.
Tokenization is making the leap from curiosity to critical infrastructure. Even as the architecture matures, the market has punished fragmentation, thin liquidity, duplicate costs, and preventable risk. Institutions that align early on around interoperability, standardized assets, and portable identities will have the compounding benefits of a unified marketplace, while others remain limited to silos.
Coordination is not an afterthought; It turns pilots into market multipliers. Whether the future trillions of tokenized value flows through a unified track or fractures through closed venues will determine the next decade of capital markets. Those who design for coordination will hold the scale; those who don’t will fund others.
