What is tokenisation? Turning real-world assets into digital assets

Imagine owning a fraction of a Picasso painting or a skyscraper dominating the New York skyline. For most of us, this is wishful thinking. But tokenisation—the process of converting real-world assets (RWAs) into cryptocurrency tokens—has the potential to unlock access to a broad range of asset classes typically reserved for professionals. There’s considerable excitement given the potential size of the market, with forecasts ranging from McKinsey’s conservative estimate of $4T¹ to Standard Chartered’s bullish $30T². This article explores the facts behind the hype.  

Tokenisation in plain terms

Despite the excitement, tokenisation isn’t a new concept. In traditional finance, stock certificates represent the number of shares held in a company, and mutual funds issue units to investors. However, digital tokens upgrade the old way of doing things, as we explain below, while still offering the same entitlements:

• Ownership of the asset

• The right to receive any income due, such as dividends, and to participate in corporate actions

• Contractual claims, including a share of a company’s assets after its debts and liabilities are settled

Financial assets are the most common tokenised RWAs to date because issuers want to streamline their operations by reducing the intermediaries involved in a trade and to take advantage of possible new revenue streams offered by innovative products. Many of the biggest asset managers have launched pilot projects: BlackRock, Franklin Templeton, Janus Henderson and Fidelity have tokenised US Treasuries and packaged the tokens in funds (but only a few are currently available to retail investors).

Real estate is also considered ripe for tokenisation due to the high value and low liquidity of the assets involved.

Why tokenisation matters

Accessibility

Tokenisation is democratising access to institutional-grade investment products. Money market funds, traditionally available only to large institutions, are now being tokenised and made accessible to a broader range of investors. BlackRock's BUIDL fund (USD Institutional Digital Liquidity Fund) launched in 2024 on Ethereum, allowing qualified investors to access US Treasury yields on-chain. In Europe, Spiko offers tokenised money market funds backed by short-term government securities, bringing institutional treasury management tools to smaller investors and businesses.

Liquidity

Tokenised funds can settle in minutes rather than the T+1 or T+2 settlement cycles of traditional finance. This matters for treasury management, businesses holding tokenised money market funds can access liquidity almost instantly rather than waiting days. The 24/7 nature of blockchain also means redemptions aren't limited to banking hours. For real-world assets like real estate or private credit, tokenisation creates secondary market liquidity where none previously existed.

Security and automation

Blockchains provide an immutable record of ownership, reducing reconciliation errors and fraud risk. Smart contracts automate dividend distributions, corporate actions, and compliance checks, cutting operational costs and eliminating intermediary fees. According to Calastone's 2025 study of 26 global asset managers³, tokenisation could reduce overall fund operating costs by 23%, with even larger savings in specific functions like fund accounting (30%) and transfer agency (25%).

Risks and challenges of tokenisation

Tokenisation may have the potential to seriously disrupt traditional financial markets, but you should also be aware of the risks before you start investing. 

The first is the inconsistent and evolving set of rules governing tokenised RWAs. These rules vary by jurisdiction and asset, which means platforms may have to operate differently depending on where their users are based.

Technology risks are another consideration. Smart contracts have vulnerabilities that hackers can exploit to drain funds in a contract or to tamper with the data feeds, known as oracles, that link blockchains with real-world information, such as asset prices. Networks are also subject to outages. 

Then there’s liquidity risk. While tokens representing fractional ownership are easier to trade than illiquid assets, they still need willing buyers. If there’s no demand or if the crypto markets crash, you may struggle to sell a token quickly or at a fair price.

The future of tokenisation

By bridging traditional finance and blockchain, tokenisation could help democratise investing, boost liquidity and make asset ownership more secure. And with the backing of Wall Street, it is seen by some as one of the technology's most successful applications.

If regulation, interoperability, and custody solutions align, tokenisation could evolve into the financial infrastructure layer of the next decade. Rather than replacing banks or asset managers, it may push them to adopt blockchain rails for settlement, record-keeping, and compliance automation. The winners will likely be those who bridge both worlds, combining regulatory credibility with blockchain efficiency. For investors, the key question isn’t whether tokenisation will happen, but how soon it will become invisible, seamlessly embedded in everyday financial products.

How to get exposure to tokenisation?

Tokenisation runs on smart contract blockchains. Ethereum dominates this space: BlackRock's BUIDL fund, Franklin Templeton's OnChain US Government Money Fund, and Spiko's tokenised money market funds all operate on Ethereum's network. Other platforms like Solana, Polygon, Avalanche, Hyperliquid and Stellar host tokenised assets, but Ethereum remains the primary infrastructure layer for institutional tokenisation.

This creates a direct link between tokenisation growth and smart contract platform adoption. As more assets move on-chain, these networks process more transactions, generate more fees, and, in Ethereum's case, burn more ETH through its fee mechanism. The success of tokenisation is, in many ways, a bet on the underlying blockchain infrastructure.

Tokenisation is still early. But if the trajectory continues, with trillions in traditional assets eventually moving on-chain, the blockchains that settle those transactions stand to benefit most directly.

¹ From ripples to waves: The transformational power of tokenizing assets, McKinsey, 2024

² Discover the power of trade finance tokenisation, Standard Chartered, 2024

³ Calastone's "Decoding the Economics of Tokenisation, March 2025