Tokenized Assets: The Next Big Trend in Finance and Investing?

Blockchain — the technology that enables cryptocurrency — can also make it faster, easier and cheaper to buy and sell nearly any asset online. This includes digital tokens representing tangible and intangible assets, including stocks, bonds, funds, real estate, intellectual property, artwork, gold, and even collections of whiskey and wine.¹

Investors can trade these tokens on a blockchain with little or no involvement from intermediaries. When someone buys a token, they own the underlying asset.

Proponents argue that tokenization will revolutionize the world of finance and investing by reducing transaction costs, accelerating transactions and boosting liquidity. According to one report, tokenized assets are projected to grow from approximately $600 billion today to $18.9 trillion by 2033, as illustrated in Figure 1.²

The belief that asset tokenization and blockchain technology could transform investing isn’t just held by crypto enthusiasts. JPMorgan Chase, Robinhood and Coinbase also see the potential of these innovations and are developing new ways to access and trade assets using blockchain-based platforms.

However, asset tokenization presents its own risks and challenges, as regulations governing this market are still evolving.

If tokenization takes off, it could boost efficiency for financial services firms, improve their profit margins, increase their stock values and potentially benefit investors as well.

How Asset Tokenization Works

Tokenization transforms the trading process by creating digital tokens that represent real-world assets that can be traded over a blockchain.

Trading tokenized assets resembles the traditional system of brokers and exchanges, but with a few key differences.

• First, the transaction is executed on a digital asset exchange or tokenized trading platform such as Coinbase. The platform uses blockchains to hold and move assets.

• The digital exchange operator matches buyers and sellers. In most cases, they match orders within their own order books, rather than routing them to multiple venues like traditional brokers.

• The exchange executes the trade and handles the clearing and settlement, including releasing payment, transferring the token to the buyer’s digital wallet and recording the transaction on the blockchain.

• This entire process happens within seconds or minutes, which is far faster than traditional stock settlements that usually require one to two days.

This general approach can be applied to many other assets, including:

• Physical assets like real estate, art and gold.

• Financial assets such as stocks, bonds and private equity.

• Intangible assets like patents and other intellectual property.

How Blockchains Enable Tokenized Assets

Blockchain is the underlying technology that enables the secure and efficient trading of digital tokens.

Whenever a blockchain records new transactions, all copies of the ledger also update. Instead of editing old entries, the network adds new entries (blocks), which are only accepted after a sufficient number of nodes agree, according to the blockchain’s rules.

No individual or entity can modify a public blockchain on their own. Because of this design, it’s difficult to tamper with a well-secured blockchain. For many users, this leads to greater trust in blockchain transactions.

Blockchain transactions can also include smart contracts, which are self-executing programs stored on the blockchain. These contracts automatically execute specific actions when certain conditions are met. For example, a smart contract can trigger a payment after an order status updates to “delivered.”

In these tokenized transactions, smart contracts can perform a significant amount of the behind-the-scenes work that a clearinghouse or back office typically handles in a traditional system. This includes verifying a buyer’s ability to pay, releasing funds and transferring ownership of an asset once the conditions are met.

What Are the Potential Benefits of Tokenized Assets?

Tokenization could be particularly useful for illiquid assets like art, collectibles or private investments. However, tokenization also offers advantages for trading more liquid assets, including:

• Faster transactions. Blockchain settlements can occur in seconds or minutes, compared to the one- to two-day clearing period of traditional financial systems.

• Reduced costs. Transactions generally require fewer intermediaries. As a result, transaction and administrative fees are expected to decline.

• Greater accessibility. Tokenized assets can change hands 24/7.

• Enhanced liquidity. Easier, 24/7 global trading can make historically illiquid assets more tradable and accessible, broadening the pool of potential buyers and sellers.

What Are the Risks Associated with Asset Tokenization?

Regulatory Uncertainty

Existing laws may not always be a perfect fit for something as new as tokenized assets. Some countries and international bodies have tried to develop rules, but these frameworks may be incomplete or untested.

In July 2025, the U.S. Securities and Exchange Commission reiterated that tokenized securities remain securities, which means they must comply with existing securities laws. But the SEC also signaled that it’s open to working with the industry to develop exemptions or new rules.³

Potential Volatility in Tokenized Asset Prices

Illiquid assets like artwork, collectibles or private companies can sometimes be hard to value. As a result, their corresponding tokens could fluctuate sharply in price, depending on the market conditions.

Unlocking the Future: Tokenized Assets Pave the Way for Next-Gen Finance

We see significant potential in tokenized assets, especially for companies that enable or facilitate the tokenization process.

Stablecoin issuers may also gain an edge if investors use their currencies to buy tokenized assets.

Alternative asset managers could benefit from tokenized versions of traditionally illiquid assets, improving liquidity, transparency and settlement speed for their portfolios.

While tokenized assets may pose risks, they aim to streamline finance and investing while also expanding investor access. In our view, their strengths make them a compelling opportunity in the evolution of digital markets.