Building a tokenized financial future: What will it cost?

Real-world asset tokenization began as a cryptographic fringe experiment, but that reality is changing right now. Investors are actively stacked on tokenized Treasury, real estate, and goods.

With more than $7 billion US Treasury Department already pushing into this space in the chain, RWA has been shaped as the most transformative force in digital finance since the early 2020s. The real question at this point is not whether RWA will change the market infrastructure.

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Value Driver vs Risk

With all the attention these days, the biggest impact is happening behind the scenes. Tokenized assets calm almost instantly, operating 24/7, allowing you to cut out the layer of intermediaries that have been putting pressure on traditional markets for decades.

So, from my perspective, the most important drivers behind their growth have little to do with financial reform. In fact, it’s ultimately about fixing a long-standing back office headache. Technical victory isn’t the only way to reduce settlement risk, speed of settlement, and fewer intermediaries. They increase market efficiency and directly affect profitability.

McKinsey predicts that tokenized assets could reach $2-4 trillion by 2030. Exchanges and asset managers streamline these processes will see significant competitive advantages long before the mass retail market reaches.

That said, there are inconspicuous blind spots that could get in the way of continuing to adopt RWA. Specifically, we are talking about storage architecture and custody procedures. The truth is: There is no close proximity to corporate grade standards in this area. Key management, incident response, and subcustody control remain immature, and a single false key can erase years of progress and generate incredible legal liabilities.

Regulators are making efforts to keep up, but so far the possible legal frameworks are in the early stages. There is no global baseline standard to talk about this area. And until we get it, all new tokenized Treasury or property transactions will be built on a vulnerable foundation. Without proper infrastructure there is a significant risk that trust in RWA could be eroding, and while it starts to expand, the industry will lose momentum.

The Future of Hybrids: Tradfi is suitable for tokenization

Tokenized markets do not only completely replace traditional markets. The infrastructure and support behind the legacy market is therefore too entrenched in a global society. Instead, looking three to five years away, it is much more likely that two systems will coexist and a hybrid model that complements each other.

Interoperability is the key to building such a hybrid system. Without the various systems, chains, ledgers can talk to each other, and tokenized assets risk remaining trapped in silos. I have long believed that Swift could and should be on centre stage here. Given the global reach and existing trust with financial institutions around the world, it can serve as a neutral distribution board for tokenized finance.

Its role is not to retain or control assets within its custody, but to provide messaging, routing and compliance checks that allow these assets to flow seamlessly across boundaries and networks.

I imagine an asset as a single connection that allows you to move any asset in any ledger while the asset itself remains in your own native chain. If done correctly, this approach gives the institution the ability to “plug in” once and scale anywhere. Trade across a wide range of systems and easily access global liquidity.

How to not be left behind

The unfortunate reality I often see is that many banks, exchanges and businesses are approaching RWA as if this was just another system upgrade. it’s not. To develop in this space, zero reconstruction is required. This is a new technology, requiring new processes, systems built for purposes, and perhaps most importantly, new thinking.

If your strategy assumes that RWA is simply a reinforcement of the current stack, then in two years or so you will be at a strategic disadvantage and the displacement will ripen. The real winners are advanced companies that are willing to commit themselves to bold strategies and discipline to follow them. It would also be wise for those companies to introduce risk experts who understand both the opportunities and pitfalls of financial innovation so that they can rely on their guidance.

The rise in tokenized RWAs is not just a passing trend. Yes, there’s still a lot to do, but the waves are coming – there’s no doubt about that. If companies stick to a “bolt-on” approach, they will be delayed very quickly. But those who are proactively prepared and innovate will shape industry rules, set benchmarks and become leaders in the next financial era.

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