Tokenisation Doesn’t Magically Make Illiquid Assets Liquid

Securitize CEO Carlos Domingo stated that tokenisation does not magically make illiquid assets liquid, as the underlying market profile of the asset remains the same.
He stressed that providing liquidity is as important as accessibility, noting that tokenising illiquid assets failed to create liquidity as many investors had assumed.
Domingo called stablecoins the “most successful” use case of tokenisation, as they apply blockchain rails to assets (like cash) that are already highly liquid.

Tokenisation can lower barriers to owning assets like New York real estate, but it does little to fix how hard those assets are to sell, according to Securitize co-founder and CEO Carlos Domingo.

Speaking in an interview, Domingo said early experiments with tokenised real-world assets showed that putting assets on-chain does not change their basic market profile. If the underlying asset is hard to trade quickly without taking a large discount, the tokenised version will behave the same way.

“Providing liquidity to the asset class is as important as providing accessibility,” he said, adding that many investors assumed tokenisation would automatically turn illiquid assets into liquid ones. “That didn’t happen, because an illiquid asset is illiquid whether you tokenize it or not.”

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Stablecoins as the “Most Successful” Use Case of Tokenisation

Domingo said the industry has responded by shifting away from illiquid markets and toward assets that are already easy to trade, such as cash and US Treasuries. In his view, the most successful tokenisation use case so far is the US dollar in the form of stablecoins, where blockchain rails amplify existing liquidity instead of trying to create it from scratch.

Tokenisation is the process of turning real-world assets (RWAs) into a digital token, giving certain benefits like fragmented ownership, higher liquidity, and lowering the barriers to entry for markets.

Recently, in a SEC Investor Advisory Committee meeting, tokenisation was the main topic among crypto founders and Wall Street executives, including BlackRock and Citadel. They discussed how tokenisation should be regulated and help the SEC to build proper frameworks for this particular sector of the industry.

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Interestingly, an October report by Standard Chartered projected tokenised RWAs to climb from US$35 billion (AU$54.2 billion) today to over US$2 trillion (AU$3.1 trillion) by 2028.

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