Much-anticipated blockchain ecosystems for institutional finance are gradually falling into place. While details and technicalities are still being worked out, William Ralston Saul has a clear vision of an end state. He calls it Investment Fund 3.0.
“Tokenization establishes a pathway by which investment managers can continue to build towards [customizable] finance tailored specifically for each client’s need,” says Saul, an entrepreneur who has been engaging with blockchain for nearly a decade and is founder and lead tutor of education platform InCrypto.
Investment managers from BlackRock on down, major banks with increasingly active digital-asset strategies, issuers and owners of all manner of real-world assets (RWAs), and financial-market infrastructure operators are, in aggregate if not entirely in concert, well along toward demonstrating that virtually anything can be tokenized and mobilized, free of the frictions of traditional transaction and settlement networks.
Citi Institute’s Tokenization 2030: Wall Street On-Chain report in June, characterizing digital money such as stablecoins and tokenized deposits as “the foundational enabler,” laid out bear-, base- and bull-case scenarios for tokenized assets by 2030. Any of those respective amounts – $2.7 trillion, $5.5 trillion, $8.2 trillion – would dwarf the total currently tracked by rwa.xyz at under $40 billion.
Also before midyear, the international asset servicing firm Apex Group, in Tokenization gaining altitude: From pilot projects to industry standard, declared, “It is not hyperbole to say that a tokenization revolution is quietly underway in the asset management sector and the broader financial system.”
Investor interest and commercial focus in tokenized products, from Apex Group survey.
In Apex’s survey of 100 senior fund management firm executives, half said their organizations had introduced tokenization in some form. Of those, 17% were said to be fully operational, 33% more limited in scope, with the rest in pilots or proofs of concept. Among those running pilots or small-scale initiatives, “45% anticipate reaching broader operational deployment within the next one to two years.”
Noting high-profile tokenization rollouts “at the top of the industry” by the likes of BlackRock, Franklin Templeton and J.P. Morgan Asset Management, Apex said, “According to our proprietary research, 41% of fund manufacturers and asset managers view tokenization as very important to their organization’s business strategy . . . Larger organizations, with greater resources and broader product ambitions, are more attuned to this turning point and more willing to invest early and at scale.
CoinShares CEO Mognetti: “Convergence, not disruption.”
“Conviction is especially pronounced within this group: 55% of respondents at firms with more than $5 billion in AUM [assets under management] say tokenization is very important, while a further 9% describe it as extremely important and their top strategic priority.”
Another data point in The Growth of Hybrid Finance, a report from CoinShares and Token Terminal: Deposits of tokenized RWAs into lending platforms and decentralized exchanges more than tripled between the second quarters of 2025 and 2026, to $7.4 billion from $2.3 billion. Over the same period, total deposits across decentralized finance fell 15%.
“Investors are not leaving traditional finance behind,” said Jean-Marie Mognetti, co-founder, president and CEO of Nasdaq-listed, global digital-asset manager CoinShares. “They are moving traditional assets onto infrastructure that settles in seconds and does not close at night. That is convergence, not disruption, and it is arriving from the traditional side.”
For institutions that execute trades in milliseconds, final settlement can take days – “one of the weakest links in capital markets,” Jenna Wright, managing director, digital assets of LMAX Group, writes in CoinDesk’s Crypto Long & Short. Enter stablecoins, no longer “peripheral’ in Wright’s estimation, which “allow money to move at the same speed as the risk it is supporting . . . Any institution that cannot settle, fund or rebalance in real time will be carrying a disadvantage before the trade even begins.”
LMAX’s Wright: “Collateral more portable.”
“Stablecoins address the movement of cash. Tokenization addresses the movement of assets,” Wright goes on. “By representing securities and other assets as programmable units of value, tokenization makes collateral more portable. Assets that would otherwise sit inside delayed settlement cycles can be pledged, transferred or released more quickly. Trapped capital can be put back to work.
“This is why tokenization should not be dismissed as another efficiency project. It changes the way trust, settlement and risk management are organized. When cash, securities and collateral can all exist on programmable rails, the old separation between asset classes starts to look less like a necessity and more like a constraint.”
There are, of course, more puzzle pieces than distributed ledger technology, application programming interfaces (APIs) and systems integrations. A section of the Apex report covering “custody, compliance and complexity” discusses the challenges of staffing, training and upskilling.
“For many firms,” it says, “internal development alone cannot keep pace with market demand . . . Many organizations appear reluctant to rely solely on internal development to close capability gaps,” and they, including bigger players, turn to third-party services or outsourcing.
“Most asset managers understand that adopting tokenization isn’t just a question of technology, it touches on custody, compliance and investor onboarding,” commented Angie Walker, commercial head of Apex Digital. “Partnering with experienced providers lets internal teams stay focused on the core of the business strategy and client relationships, while third-party specialists handle the underlying complexity.”
The Bank Policy Institute has sought to stress, in comment letters to regulatory agencies, that “technologies and payment methods change, but stopping illicit finance and furthering America’s foreign policy goals remains imperative . . . The relevant federal agencies should work together to establish robust requirements for the crypto ecosystem to help ensure that those entities help combat illicit finance and support the federal government’s national and geopolitical priorities.”
It follows that operationalizing tokenized RWAs requires reliability, predictability, trust, and critical know-your-customer and anti-money laundering technology and compliance measures.
Streamex CEO McPhie
“I see this as very similar to earlier transitions in cloud, mobility, and IoT [internet of things], where innovation moves faster than enterprise infrastructure and governance controls can keep pace,” states Ravishankar Chamarajnagar, founder and CEO of stablecoin infrastructure provider Brackt. “The organizations that stand out embed security, resilience and compliance into the architecture early rather than as an afterthought.”
“The way I think about it,” says Henry McPhie, co-founder and CEO of Streamex, “is that institutional capital has had decades of high-trust infrastructure to operate in. If tokenized markets want to absorb that capital meaningfully, they have to meet or exceed that bar, not ask the market to lower it.”
“For decades,” says the Bank Policy Institute, “banks have been the first line of defense to stop illicit finance. Now is the moment to put in place effective policies to ensure that crypto market participants can play that same role, so crypto does not become a permanent means by which criminals can operate undetected.”
Apex Group itself may be showing the way through its own enterprise-grade tokenization venture, Tokeny. “Issue, manage and distribute assets on blockchain while ensuring compliance,” says its home page. “Expertise forged through tokenizing $32 billion across 120+ successful use cases.”
Luxembourg-based Tokeny leverages ERC-3643, an open-source standard for permissioned tokens that was formerly known as the T-REX protocol. Tokeny offers the T-REX Platform for tokenized asset and investment management; and T-REX Engine, a set of APIs and developer tools that integrates with existing systems for “unlocking immediate on-chain finance capabilities.”
In March, Apex Group said it was adopting the T-REX Ledger “as its default multi-chain orchestration infrastructure, providing a neutral coordination layer for tokenized asset ownership and compliance across multiple blockchain ecosystems.” Apex also stated its “broader ambition to tokenize assets under its administration at scale, with an initial target of $100 billion in tokenized assets by June 2027.”
Apex founder and CEO Peter Hughes explained that the neutral orchestration layer closes a gap; it “whitelists investor identity and brings clarity to KYC and AML across these networks, so transfer agents can maintain the governance and regulatory integrity that regulated markets require.”
Another missing link, described as a “final hurdle for institutional tokenization” enhancing ERC-3643, is a “confidentiality layer” of Fully Homomorphic Encryption (FHE). Through a partnership announced in March with the Apex-supported T-REX Network, Zama’s FHE solution “allows smart contracts to compute without ever needing to decrypt the data. This enables financial institutions to issue, manage and trade digital assets on the upcoming T-REX public blockchains while keeping sensitive data confidential, with the same discretion expected from traditional financial systems.”
Brackt CEO Chamarajnagar
As Joachim Lebrun, T-REX Network co-founder and lead author of the ERC-3643 standard, put it, "Integrating Zama's FHE Protocol directly into the T-REX Ledger means institutions can finally operate fully on-chain without exposing their confidential data to the world. That is the missing piece for unlocking real institutional scale.”
Chamarajnagar of Brackt said that “while the [FHE] technology is still computationally intensive, it has enormous long-term potential for regulated industries and financial systems.”
In June, Apex collaborated in the launch of a blockchain-native real estate fund along with Archax, Goldman Sachs, LRC Group and Ownera, saying it “marks a significant step forward in the institutional adoption of tokenized fund structures within the global real estate market.”
According to Streamex’s McPhie, T-REX has become the de facto framework for tokenizing regulated securities on Ethereum-compatible chains. Compliance-related functions are embedded in the token. In practical terms, he says, it's the difference between "we promise this is compliant" and "the asset itself won't permit a non-compliant transfer.”
“The real-time characteristic of this infrastructure is unlike anything we have seen with other technologies, and we ignore the risks at our own peril,” says Chamarajnagar. “The biggest reliability issues are operational predictability and trust in execution. Smart-contract vulnerabilities, chain congestion, oracle failures, key management risks, and cross-chain bridge exploits are all part of the systemic risk.”
Jeffrey Kutler of GARP contributed reporting for this article.