365int
The tokenization of real-world assets (RWAs) is gaining momentum, but the primary obstacle to widespread adoption isn’t regulatory ambiguity—it’s the absence of robust secondary markets. This perspective comes from Aaron Kaplan, founder and co-CEO of Prometheum, a digital asset trading and custody firm.
In a recent interview, Kaplan addressed comments made by ARK Invest CEO Cathie Wood, who suggested that unclear regulations are hindering the tokenization of funds. Kaplan countered this notion, stating, “Contrary to popular belief, the hurdle isn’t ambiguous regulation.” He emphasized that existing frameworks, such as the U.S. Securities and Exchange Commission’s (SEC) special-purpose broker-dealer designation and Alternative Trading System (ATS) licensing, already provide clear pathways for issuing blockchain-native funds with efficiency advantages over traditional methods.
The real challenge, according to Kaplan, lies in the limited infrastructure for trading tokenized securities. “These assets currently sit on a handful of blockchains, but there is still no fully public secondary market where institutional and retail investors can buy, sell, and trade them, as they do with traditional securities,” he explained.
Kaplan outlined two primary approaches to developing these essential platforms:
- Decentralized Finance (DeFi) Frameworks: Companies like Ondo Finance and Securitize are building tokenized securities markets using DeFi principles, aiming to leverage blockchain’s transparency and efficiency.
- Integration into Existing Brokerage Platforms: Traditional brokerage firms are exploring the incorporation of tokenization protocols into their existing SEC-registered platforms, adhering to federal securities laws while modernizing their services.
Kaplan highlighted the competitive landscape, noting that legacy financial institutions are investing in their own tokenization initiatives or partnering with fintech and crypto firms to remain relevant. “What’s at stake is the next wave of users onboarding into the digital asset space,” he remarked. “The question is then, will the brokerage industry enter the digital asset space, or will crypto platforms build the next-gen markets for investors to buy and sell digital securities?”
Prometheum aims to bridge this infrastructure gap by creating a full-service digital asset securities marketplace. The company asserts that securities traded on its platform benefit from reduced fees, faster settlement times, and increased efficiency.
Investor demand for “digital native” versions of traditional assets is growing. Kaplan observed that investors seek access to digital representations of various assets within a single, user-friendly ecosystem to meet diverse financial goals.
Real estate is one sector where tokenization is making significant strides. Luxury and commercial properties across North America are being tokenized, with secondary markets emerging to facilitate the trading of these digital shares.
A 2024 report by Boston Consulting Group (BCG) described tokenization as a “game-changing blockchain use case in financial services,” highlighting its scalability and potential for near-instant transactions.
