Regulation Isn’t the Biggest Barrier to Tokenization, Says Prometheum CEO

The market for tokenized real-world assets (RWAs) continues to expand, but contrary to popular belief, regulatory challenges are not the main roadblock to broader adoption. Instead, the biggest limitation is the absence of dedicated secondary markets where investors can trade these tokenized securities, according to Aaron Kaplan, co-founder and co-CEO of Prometheum.

In an interview with Cointelegraph, Kaplan referenced ARK Invest CEO Cathie Wood’s recent remarks at the Digital Asset Summit in New York. Wood highlighted regulatory uncertainty as a key reason her firm has not yet tokenized its funds. However, Kaplan argued that the issue is not a lack of regulatory clarity. He pointed out that the U.S. Securities and Exchange Commission (SEC) already provides a structured framework through its special purpose broker-dealer regulations and Alternative Trading System (ATS) licensing, which allow blockchain-based funds to operate under regulated conditions.

“The real bottleneck lies in the limited market infrastructure for delivering tokenized securities trading to a broad investor base,” Kaplan explained.

### Growing Demand for Tokenized RWAs

Excluding stablecoins, the value of tokenized RWAs has surged by nearly 8% in the past month, reaching $19.5 billion. The most prominent use cases for tokenization remain private credit and U.S. Treasury debt. Despite this growth, institutional and retail investors currently lack fully accessible public secondary markets for buying and selling these digital assets, unlike traditional securities, which are traded on platforms such as Nasdaq or brokerage accounts like Fidelity.

Kaplan identified two primary approaches for developing these necessary markets. The first involves leveraging decentralized finance (DeFi) models, as seen with companies like Ondo Finance, Ethena Labs, and Securitize. These firms are actively working to establish decentralized platforms for trading tokenized securities.

The second approach integrates tokenization protocols within existing brokerage platforms that are already registered with the SEC and operate under federal securities laws. Kaplan suggested that major fintech and cryptocurrency trading platforms, which are accustomed to handling digital asset transactions, may look to expand their services to include tokenized securities. However, he also noted that traditional financial institutions are unlikely to surrender market share without competition. Many of these institutions are already investing in tokenization initiatives or forming partnerships with fintech firms to stay relevant.

### Who Will Shape the Future of Digital Asset Markets?

Kaplan sees a critical juncture in the evolution of digital assets: “What’s at stake is the next wave of users onboarding into the digital asset space. The question is, will the brokerage industry step in, or will crypto platforms take the lead in building next-generation markets for digital securities?”

Prometheum, as a digital asset trading and custody firm, is positioning itself to bridge the infrastructure gap by developing a full-service marketplace for digital asset securities. The company claims that its platform can offer lower fees, faster settlements, and greater efficiency compared to traditional financial systems.

### Growing Interest in Tokenization

The demand for tokenized assets is rising among traditional investors who want digital-native versions of familiar financial instruments within a single ecosystem. This trend is particularly evident in the real estate sector, where both luxury and commercial properties across North America are being tokenized. New secondary markets are emerging to facilitate the trading of tokenized property shares, further driving the shift toward blockchain-based assets.

A report by the Boston Consulting Group (BCG) from 2024 emphasized tokenization as a game-changer for financial services due to its scalability and near-instant transaction capabilities. According to BCG’s managing director and senior partner, Sean Park, tokenization could enhance investor returns by approximately $100 billion annually while simultaneously increasing financial institutions’ revenue streams.

The potential of tokenization has also caught the attention of global organizations. The World Economic Forum (WEF) recently explored the impact of tokenization in an article by Yuvan Rooz, co-founder and CEO of Digital Asset. Rooz highlighted that nearly 10% of the $230 trillion global securities market could be used as collateral. He argued that tokenization could significantly improve capital efficiency by unlocking untapped liquidity, enabling financial transactions to settle within the same day.

### The Road Ahead

As the financial landscape continues to evolve, the role of tokenization in transforming asset management is becoming increasingly clear. With industry leaders like Prometheum, Securitize, and traditional brokerage firms all vying for dominance, the future of tokenized securities will likely depend on who can successfully establish the necessary market infrastructure.

While regulation often takes the blame for slowing innovation, Kaplan’s insights suggest that the real challenge lies in creating a robust, accessible ecosystem for trading tokenized assets. Whether through DeFi-based solutions or traditional brokerage integrations, the competition to build the next generation of di

gital asset markets is well underway.

Source :

https://cointelegraph.com/news/contrary-popular-belief-regulation-holding-back-tokenization-prometheum-ceo

This is non-financial/medical advice and made using AI so could be wrong.