Tokenizing equity may not reshape markets overnight, but its long-term impact could be significant once access is scaled and assets are fully integrated into environmental blockchain systems, according to Greg Cipolaro, global head of research at NYDIG.
Cipolaro argues that tokenized real-world assets (RWAs) will provide only modest advantages at first, but their utility will expand significantly as regulation, interoperability, and user access improve.
Early gains: fees and network effects
In the near term, Cipolaro expects benefits to remain limited primarily to transaction fees generated when trading tokenized assets on-chain, alongside enhanced network effects as more assets require infrastructure for storage and settlement.
These early advantages primarily stem from the blockchain networks hosting tokenized securities, not from the broader cryptocurrency market. Tokenization today remains highly fragmented across different chains with varying compliance designs, and participation is constrained by regulatory uncertainty and limited investor access.
Long-term benefits: interoperability and on-chain yield
NYDIG believes the true value of tokenization only becomes apparent once tokenized assets are interoperable, composable, and widely available. In that environment, real-world assets (RWAs) can be deeply integrated into decentralized finance (DeFi), allowing them to operate as follows:
* Collateral for decentralized lending markets.
* Inputs for automated trading strategies.
* Components for fully on-chain structured financial products.
These potential uses depend on tokenized equities and fixed-income instruments moving freely within open decentralized finance structures, which is currently not possible under existing regulatory constraints.
Regulation, technology, and access are what will determine growth
Cipolaro points to three key drivers that will determine how quickly tokenization expands:
* Regulatory clarity: Supportive policy signals for innovation, such as those recently hinted at by SEC Chairman Gary Gensler, will allow tokenized stocks and bonds to interact more seamlessly with decentralized finance (DeFi) protocols. Without this, assets remain isolated.
* Technological advancement: Interoperability across chains and standardized token formats must continue to evolve for tokenized real-world assets to operate smoothly across diverse blockchain networks.
* Democratic access (for all): fractional ownership and simplifying the onboarding process for investors are essential to unlock the liquidity and participation necessary to scale the market beyond institutional pilot projects.
A market worth watching
While the immediate economic impact on traditional cryptocurrencies may be small, NYDIG's analysis suggests that tokenization has become an increasingly important growth sector. The significant increase in tokenized U.S. Treasury funds on the Ethereum network and other open networks already demonstrates market appetite for on-chain compliant financial products.
As mergers deepen and regulatory frameworks mature, Cipolaro believes tokenization can evolve from a niche experiment to one of the most significant long-term trends in digital finance.
