Why Tokenized Assets Aren’t Taking off Despite the Hype—What’s Holding Investors Back

Fragmented Standards Restrict Scale

Tokenized funds, securities, and currency instruments person moved beyond method demonstrations, but differences among Layer 1 blockchains, interoperability systems, and permissioned and permissionless networks proceed to bounds scale. Franklin Templeton (NYSE: BEN), which reported assets nether absorption of $1.78 trillion arsenic of May 31, 2026, is among the large plus managers processing blockchain-based concern products.

In an exclusive interrogation with Bitcoin.com News, Franklin Templeton enforcement Chetan Karkhanis, who leads integer plus partnerships successful Asia-Pacific, described the method situation facing the sector:

“From a exertion standpoint, the biggest situation is astir apt ubiquity of standards with the merchandise set.”

Assets and payments often run crossed abstracted networks, portion colony whitethorn impact stablecoins, tokenized slope deposits, oregon cardinal slope integer currencies (CBDCs) governed by antithetic systems. “Even elemental tokenized currency products deficiency communal rails of convergence,” Karkhanis noted.

The Bank for International Settlements (BIS) has outlined however interoperable networks connecting tokenized assets with cardinal slope reserves and commercialized slope wealth could trim reconciliation, enactment simultaneous settlement, and alteration programmable transactions. Without communal infrastructure, however, those benefits whitethorn stay confined to idiosyncratic platforms.

Regulation and Distribution Limit Adoption

Beyond technology, inconsistent cross-border rules find wherever products whitethorn beryllium sold, who tin ain them, and however custody and colony are treated. Karkhanis pointed to a broader acceptable of constraints:

“The larger challenges are apt regulatory clarity crossed borders and truly awareness, adoption and acquisition – which could pb to greater adoption of tokenized RWA if done right.”

The November 2025 tokenization report from the International Organization of Securities Commissions (IOSCO) likewise identified regulatory treatment, interoperability, colony arrangements, and operational dependencies arsenic persistent barriers. Greater coordination could grow superior pools, portion continued fragmentation whitethorn restrict products to selected jurisdictions and blockchain ecosystems.

Established banks, brokerages, advisers, and money platforms already supply custody, reporting, and entree to retail and organization capital, portion galore accepted organisation platforms are inactive experimenting with proofs of conception (POCs) alternatively than commercialized deployments astatine scale.

“Traditional organisation platforms are not each determination yet. Some are experimenting and launching POCs but not astatine standard commercialized deployments,” the Franklin Templeton enforcement remarked. “The exertion exists, but liquidity successful tokenized RWA and issuance is minuscule compared to accepted assets.”

Traditional and Digital Channels Could Converge

Rather than displacing existing finance, tokenization whitethorn widen it done accepted accounts, exchanges, wallets, and blockchain applications. Karkhanis said:

“I judge determination volition beryllium a diverseness of offerings – some incumbents and DeFi adjacent gen players volition person an accidental to participate.”

Incumbents clasp astir capitalist relationships and assets, portion decentralized concern platforms could pull newer generations of investors and their plus flows. Competition volition apt beryllium connected accessibility, merchandise selection, regulated custody, consolidated reporting and colony ratio alternatively than blockchain infrastructure alone.

Familiar products, including tokenized stocks, bonds, and exchange-traded funds, whitethorn connection the clearest way to broader organisation due to the fact that investors already recognize their risks and returns. Tokenization could present its top worth successful markets involving analyzable ownership, restricted access, oregon predominant collateral movement.

Portfolio Use Will Define Success

Karkhanis believes “the main relation plus managers similar america tin play astatine the existent juncture is acquisition and consciousness building, and merchandise appeal.”

Mainstream investors volition proceed to measure returns, risks, costs, liquidity, and suitability alternatively than the exertion signaling ownership. Franklin Templeton’s Onchain U.S. Government Money Fund illustrates that exemplary by combining a regulated, U.S.-registered wealth marketplace money with blockchain-based record-keeping and administration.

Looking 5 years ahead, the enforcement expects blockchain infrastructure to slice into the background, with investors benefiting from tokenized products without needing to recognize the underlying technology, overmuch similar they usage mobile phones and astute devices today. Ultimately, adoption volition beryllium connected meaningful plus growth, wider capitalist participation, and sustained secondary marketplace liquidity. He framed occurrence successful applicable terms:

“Simplifying that acquisition and making it seamless volition guarantee greater adoption and occurrence volition truly beryllium measured by the level of plus maturation and capitalist adoption.”