Interview: the skeptic's view on Tokenization & real-world assets (RWAs) — what would change their mind

The tokenized real-world asset market surged past $12 billion in total value locked by late 2025, with proponents claiming this represents merely the tip of a $16 trillion iceberg by 2030. Yet amid the breathless projections and institutional announcements, a growing chorus of skeptics questions whether blockchain-based tokenization of physical assets—from carbon credits to green bonds to real estate—delivers genuine improvements over existing financial infrastructure or simply adds an expensive layer of technological complexity. For climate-focused applications, where carbon credit tokens and green bond fractionalization promise to unlock billions in sustainable finance, the stakes of this debate extend far beyond cryptocurrency market dynamics. This interview synthesizes perspectives from practitioners, regulators, and institutional investors who remain unconvinced about RWA tokenization while articulating precisely what evidence would change their minds.

Why It Matters

The intersection of tokenization and climate finance has attracted substantial attention from both traditional financial institutions and blockchain-native platforms. According to Boston Consulting Group and ADDX research, tokenized assets could represent $16.1 trillion by 2030, with sustainable finance instruments comprising an estimated 15-20% of that addressable market. The 2024-2025 period witnessed tokenized U.S. Treasury products exceed $2.5 billion in assets under management, led by Franklin Templeton's OnChain U.S. Government Money Fund and BlackRock's BUIDL fund, which collectively demonstrated institutional appetite for on-chain representations of traditional securities.

Carbon credit tokenization emerged as a particularly contentious application. Platforms like Toucan Protocol and Flowcarbon tokenized over 25 million tonnes of carbon credits by mid-2025, promising enhanced transparency, fractionalization for retail participation, and programmable retirement mechanisms. The voluntary carbon market, valued at approximately $2 billion in 2024, saw tokenized credits represent roughly 8% of total trading volume—a figure that skeptics argue reflects more speculation than genuine climate impact.

Green bond tokenization similarly gained momentum. The European Investment Bank issued a €100 million digital bond in 2024, while Singapore's Project Guardian explored tokenized green bonds across multiple jurisdictions. Proponents argue these instruments reduce issuance costs by 35-65 basis points and enable previously impossible fractional ownership starting at $100 minimums. Skeptics counter that existing bond markets function adequately, questioning whether marginal efficiency gains justify entirely new technological infrastructure.

KPI	2024 Baseline	2025 Current	2030 Projection	Skeptic Assessment
Total Tokenized RWA TVL	$5.2B	$12.1B	$16.1T	Speculative growth assumptions
Tokenized Carbon Credits (tonnes)	18M	28M	500M	Quality and additionality concerns
Green Bond Tokenization Volume	$340M	$1.2B	$50B	Marginal improvement over TradFi
Average Transaction Cost Reduction	22%	31%	65%	Excludes compliance overhead
Retail Investor Participation	2.1%	4.8%	35%	Regulatory barriers remain
Secondary Market Liquidity Ratio	0.12	0.18	0.85	Insufficient market depth

Key Concepts

Real-World Asset Tokenization refers to the process of representing ownership rights in physical or financial assets as digital tokens on blockchain infrastructure. Unlike purely digital assets such as Bitcoin or utility tokens, RWA tokens derive their value from underlying assets including real estate, commodities, securities, carbon credits, and intellectual property. The tokenization process typically involves legal structuring to ensure token holders possess enforceable claims, technical implementation on public or permissioned blockchains, and ongoing custody and administration of underlying assets.

Security Tokens represent tokenized securities that fall under existing securities regulations. In the United States, security tokens must comply with SEC registration requirements or qualify for exemptions such as Regulation D (accredited investors), Regulation A+ (limited public offerings), or Regulation S (offshore transactions). This regulatory classification distinguishes security tokens from utility tokens and creates compliance burdens that skeptics argue eliminate purported efficiency advantages.

Fractionalization enables division of traditionally illiquid or high-value assets into smaller, tradeable units. A $50 million commercial building or a $10 million green bond can theoretically be divided into tokens representing $100 ownership stakes. Proponents argue fractionalization democratizes access to institutional-grade investments. Skeptics note that fractionalization creates coordination problems for asset governance and that existing structures like REITs and mutual funds already provide similar benefits.

Smart Contracts are self-executing code deployed on blockchain networks that automate contractual obligations. In RWA contexts, smart contracts can automate dividend distributions, enforce transfer restrictions, execute compliance checks, and retire carbon credits upon use. The immutable nature of deployed smart contracts presents both benefits (tamper resistance) and risks (inability to correct errors without complex governance mechanisms).

Oracle Problems represent a fundamental challenge in connecting real-world data to blockchain systems. Oracles are services that feed external information—asset valuations, carbon credit verification, interest rate data—to smart contracts. The reliability, manipulation resistance, and centralization risks of oracle infrastructure remain significant concerns, particularly for climate applications requiring accurate measurement, reporting, and verification (MRV) of emissions reductions.

Regulatory Frameworks governing tokenized assets remain fragmented globally. The EU's Markets in Crypto-Assets Regulation (MiCA) provides comprehensive oversight for crypto-assets while treating security tokens under existing securities law. The SEC maintains that most tokens constitute securities under the Howey test, creating compliance complexity for U.S.-based issuers. Singapore, Switzerland, and the UAE have developed more accommodating frameworks, leading to regulatory arbitrage concerns.

What's Working

Tokenized Treasuries and Money Market Instruments

The most successful RWA tokenization applications involve low-risk, highly liquid underlying assets where blockchain infrastructure provides genuine operational benefits. Franklin Templeton's OnChain U.S. Government Money Fund (FOBXX), operating on Stellar and Polygon networks, accumulated over $700 million in assets by late 2025 while processing share transfers with settlement finality in minutes rather than the traditional T+1 cycle. BlackRock's BUIDL fund on Ethereum demonstrated similar traction, attracting institutional capital seeking on-chain yield with minimal credit risk.

These products succeed because they tokenize assets with minimal oracle complexity—U.S. Treasury rates are publicly verifiable and asset custody occurs through established institutional channels. The technology adds genuine value through 24/7 transferability, programmable composability with DeFi protocols, and reduced operational overhead for fund administration.

Carbon Credit Transparency Infrastructure

Despite skepticism about speculative trading, tokenization has improved carbon credit transparency in measurable ways. Toucan Protocol's Base Carbon Tonne (BCT) and Nature Carbon Tonne (NCT) created standardized, on-chain representations of verified carbon credits with immutable retirement records. The KlimaDAO treasury mechanism demonstrated how blockchain transparency could expose questionable offset practices—when low-quality credits were bridged on-chain, their prices collapsed as market participants accessed previously obscured quality information.

Flowcarbon's partnership with Celo Foundation established carbon credit-backed stablecoins that automatically allocate transaction fees toward offset retirement. While transaction volumes remain modest, the mechanism demonstrates programmable sustainability commitments impossible with traditional offset procurement.

Green Bond Distribution Efficiency

Tokenized green bond issuances have achieved documented cost reductions. The Monetary Authority of Singapore's Project Guardian demonstrated 40% reductions in issuance costs for a tokenized green bond compared to traditional structures, primarily through automated compliance verification and reduced intermediary involvement. Secondary market settlement costs decreased by approximately 65% when trades occurred on-chain rather than through conventional clearing systems.

What's Not Working

Regulatory Uncertainty and Jurisdictional Fragmentation

Skeptics consistently cite regulatory risk as the primary barrier to RWA tokenization achieving its theoretical potential. Despite five years of industry development, no major jurisdiction has established comprehensive frameworks that provide legal certainty for tokenized securities trading. The SEC's enforcement-driven approach has created compliance costs that, according to industry estimates, exceed $500,000 per token issuance when accounting for legal structuring, broker-dealer relationships, and ongoing reporting requirements.

Cross-border complications multiply these challenges. A tokenized green bond issued under EU regulations cannot freely trade on U.S. platforms without SEC registration or exemption compliance. This jurisdictional fragmentation undermines the "global liquidity" benefits that tokenization proponents frequently cite.

Liquidity Gaps and Market Structure Deficiencies

Despite theoretical liquidity advantages, most tokenized assets exhibit thin secondary markets with wide bid-ask spreads exceeding 200-500 basis points—worse than comparable traditional securities. The Securitize-operated trading platforms, among the most established security token venues, report average daily volumes under $2 million across all listed assets. This illiquidity reflects both regulatory restrictions limiting market participation and insufficient assets tokenized to generate network effects.

Carbon credit token markets demonstrate similar problems. After initial speculation-driven volume spikes, tokenized credit trading declined over 70% from 2022 peaks, with liquidity concentrating in a handful of pools on decentralized exchanges. The promised retail participation failed to materialize at scale, with on-chain data indicating that fewer than 15,000 unique addresses held tokenized carbon positions by late 2025.

Oracle and MRV Reliability Concerns

For climate applications, the oracle problem presents existential challenges. Carbon credit quality depends entirely on accurate measurement, reporting, and verification of underlying emissions reductions—processes that occur in the physical world and require trusted third-party attestation. Tokenizing a carbon credit does not improve its underlying quality; it merely creates a blockchain record of a registry entry.

Critics argue that blockchain transparency may actually obscure quality problems by presenting low-quality credits with the same technical credibility as rigorously verified offsets. The collapse of various tokenized credit prices exposed rather than created quality issues, but the speculation that occurred beforehand demonstrated how blockchain liquidity could amplify problematic market dynamics.

Key Players

Established Leaders

Securitize operates the largest compliant security token issuance and trading platform in the United States, having facilitated over $1 billion in tokenized securities issuance. The company holds SEC broker-dealer and transfer agent registrations, positioning it as critical infrastructure for regulated RWA tokenization.

Franklin Templeton became the first major asset manager to launch tokenized funds on public blockchains, with its FOBXX product demonstrating institutional acceptance of blockchain-based fund administration. The firm's continued expansion into tokenized products signals traditional finance engagement with the technology.

BlackRock launched its BUIDL tokenized fund through partnership with Securitize, bringing the world's largest asset manager into direct RWA tokenization participation. BlackRock's involvement provides significant legitimacy but also raises questions about whether blockchain infrastructure provides genuine advantages over traditional fund structures.

Emerging Startups

Centrifuge pioneered real-world asset lending protocols, enabling small and medium enterprises to finance receivables and inventory through DeFi infrastructure. The platform has facilitated over $400 million in loans against real-world collateral, demonstrating viable credit markets for tokenized assets.

Toucan Protocol established foundational infrastructure for carbon credit tokenization, creating bridges between traditional carbon registries (Verra, Gold Standard) and blockchain networks. Despite market volatility, Toucan's technology remains central to on-chain carbon markets.

Flowcarbon raised $70 million led by a]Andreessen Horowitz to develop tokenized carbon credit infrastructure, though the company subsequently pivoted away from speculative trading toward enterprise carbon management solutions—a shift skeptics cite as evidence of limited market demand for tokenized offsets.

Key Investors and Funders

Major venture capital firms including a]Andreessen Horowitz, Paradigm, and Polychain Capital have invested over $2 billion in RWA tokenization infrastructure since 2021. Traditional financial institutions including JPMorgan (through Onyx), Goldman Sachs, and Citi have launched tokenization initiatives, though most remain in pilot phases. Government innovation funds in Singapore, Switzerland, and the UAE actively support tokenization experimentation through regulatory sandboxes.

Skeptic Perspectives and Rebuttals

Skeptic View 1: "Tokenization adds complexity without solving real problems."

Skeptics argue that existing financial infrastructure—securities depositories, clearinghouses, transfer agents—handles trillions of dollars efficiently. Tokenization introduces smart contract risk, private key management complexity, and blockchain operational requirements without demonstrating clear improvements for most use cases.

Rebuttal: Proponents acknowledge that tokenization must prove incremental value. They point to specific use cases—24/7 settlement, programmable compliance, automated corporate actions—where blockchain infrastructure provides measurable improvements. The counterargument remains that these improvements are marginal and achievable through traditional technology upgrades.

Skeptic View 2: "Carbon credit tokenization amplifies speculation without improving climate outcomes."

Critics observe that tokenized carbon markets attracted speculators seeking price appreciation rather than entities seeking offset retirement. On-chain data indicates retirement rates below 15% for tokenized credits, suggesting most tokens circulate as speculative instruments rather than climate tools.

Rebuttal: Advocates argue that initial speculation attracted attention and capital to carbon markets, and that blockchain transparency exposed quality problems in ways traditional registries could not. Long-term, programmable retirement mechanisms and carbon-backed financial instruments could align speculation with climate outcomes.

Skeptic View 3: "Regulatory uncertainty makes institutional adoption impossible."

Until major jurisdictions establish comprehensive, predictable frameworks for tokenized securities, institutional capital will remain on the sidelines. The SEC's enforcement actions against token issuers have created compliance costs that eliminate efficiency gains.

Rebuttal: Proponents note that regulatory clarity is emerging—MiCA implementation, Singapore's Payment Services Act expansion, and SEC engagement with spot Bitcoin ETFs signal maturing regulatory approaches. The counterargument is that meaningful clarity for tokenized securities remains years away.

What Would Change Skeptics' Minds:

• Secondary market liquidity exceeding traditional security equivalents
• Regulatory frameworks providing legal certainty in G7 jurisdictions
• Documented evidence of tokenization improving climate MRV quality
• Cost savings exceeding 100 basis points after compliance overhead
• Retirement rates for tokenized carbon credits exceeding 50%

Action Checklist

• Assess whether specific use cases require blockchain infrastructure or can achieve objectives through traditional technology improvements
• Evaluate regulatory exposure across target jurisdictions before committing to tokenization implementation
• Conduct due diligence on oracle infrastructure reliability for any climate-related tokenization applications
• Analyze secondary market liquidity requirements and verify that tokenized structures can achieve adequate trading depth
• Establish clear metrics for success that distinguish genuine efficiency improvements from speculative activity
• Develop contingency plans for regulatory changes that could affect tokenized asset structures
• Implement robust custody and private key management procedures before acquiring tokenized positions

FAQ

Q: Does tokenizing carbon credits improve their underlying quality? A: No. Tokenization creates a blockchain representation of credits issued by registries like Verra or Gold Standard, but does not independently verify the underlying emissions reductions. Token quality depends entirely on registry standards and MRV processes that occur off-chain. Blockchain transparency may expose quality issues faster, but does not prevent low-quality credits from being tokenized.

Q: Why do tokenized assets have poor secondary market liquidity despite theoretical advantages? A: Several factors limit liquidity: regulatory restrictions prevent most retail investors from participating; institutional investors remain cautious about operational risks; insufficient assets have been tokenized to generate network effects; and the specialized knowledge required to evaluate tokenized positions limits buyer pools. Markets require years of volume accumulation to develop adequate depth.

Q: Are tokenized green bonds materially different from traditional green bonds? A: The underlying credit and use-of-proceeds characteristics remain identical. Tokenization potentially reduces issuance and transfer costs, enables fractional ownership at lower minimums, and creates programmable compliance and reporting features. Whether these improvements justify new technological infrastructure depends on specific issuer requirements and investor preferences.

Q: What happens to tokenized assets if the issuing platform fails? A: This depends on legal structuring. Well-designed tokenization structures separate asset custody from platform operations, ensuring token holders retain claims on underlying assets regardless of platform viability. However, many early tokenization projects lacked robust bankruptcy-remote structures, and recovering assets from failed platforms can involve complex legal proceedings across multiple jurisdictions.

Q: How should regulators approach RWA tokenization oversight? A: Skeptics generally favor technology-neutral regulation that applies existing securities, commodities, and banking rules to tokenized equivalents rather than creating new blockchain-specific frameworks. Proponents argue that technology-specific accommodations are necessary to enable innovation. The optimal approach likely involves clarifying how existing rules apply while providing limited sandboxes for experimentation.

Sources

• Boston Consulting Group and ADDX, "Relevance of On-Chain Asset Tokenization in 'Crypto Winter'," 2023
• Franklin Templeton, OnChain U.S. Government Money Fund prospectus and performance data, 2024-2025
• Monetary Authority of Singapore, Project Guardian Phase 1 Report: Asset Tokenization and DeFi Protocols, 2024
• Toucan Protocol, Carbon Credit Bridge Documentation and On-Chain Analytics, 2023-2025
• U.S. Securities and Exchange Commission, Framework for "Investment Contract" Analysis of Digital Assets, 2019
• European Banking Authority, Report on Crypto-Assets and Markets in Crypto-Assets Regulation Implementation, 2025
• World Bank Climate Warehouse and Carbon Market Watch, State of the Voluntary Carbon Market Annual Report, 2025