Myths vs. realities: Tokenization & real-world assets (RWAs) — what the evidence actually supports

The total value of tokenized real-world assets on public blockchains surpassed $17 billion by January 2026, up from roughly $3.5 billion in early 2024, according to rwa.xyz's on-chain analytics dashboard. Yet the gap between headline market capitalization and the practical utility of tokenized assets remains wide. For sustainability leads evaluating whether tokenization can unlock new capital flows for green infrastructure, carbon credits, or renewable energy projects, distinguishing verified outcomes from promotional claims is essential to avoid misallocating resources and credibility.

Why It Matters

Tokenization, the process of representing ownership rights in real-world assets as digital tokens on a blockchain, promises to reshape how sustainable infrastructure is financed and traded. The thesis is compelling: by fractionalizing ownership and reducing settlement friction, tokenization could broaden investor access to previously illiquid asset classes such as carbon credits, renewable energy projects, and green real estate. Boston Consulting Group estimates that tokenized assets could represent $16 trillion in value by 2030, roughly 10% of global GDP (BCG, 2024).

In North America specifically, regulatory developments are accelerating interest. The U.S. SEC's approval of tokenized money market funds from Franklin Templeton and BlackRock in 2024 and 2025 signaled institutional acceptance of on-chain asset representation. Meanwhile, organizations like the Integrity Council for the Voluntary Carbon Market (ICVCM) are exploring tokenized carbon credit registries that could improve transparency and reduce double-counting. For sustainability leads, the question is no longer whether tokenization will matter, but which claims about its current capabilities are supported by evidence and which remain aspirational.

Key Concepts

Real-world asset tokenization involves creating a digital token on a blockchain that represents legal ownership of, or economic exposure to, a physical or financial asset. Common asset classes being tokenized include U.S. Treasury securities, real estate, private credit, carbon credits, and renewable energy certificates. The token acts as a programmable wrapper around the underlying asset, enabling features such as fractional ownership (buying $100 worth of a $50 million property), automated compliance through smart contracts, and 24/7 secondary market trading.

The critical distinction is between tokenized financial instruments (where the token represents a regulated security) and tokenized commodity-like assets (such as carbon credits or RECs, where the token represents an environmental claim). Each category faces different regulatory, custody, and verification challenges that significantly affect practical viability.

Myth 1: Tokenization Eliminates Intermediaries and Drastically Cuts Costs

The most persistent claim is that tokenization removes banks, brokers, and custodians from asset transactions, reducing costs by 50 to 80%. The evidence does not support this at current scale. A 2025 analysis by the International Organization of Securities Commissions (IOSCO) found that tokenized security issuances still require legal counsel, transfer agents, licensed custodians, and compliance infrastructure. The actual cost reduction for a tokenized bond issuance compared to a traditional issuance was 15 to 35%, primarily from reduced settlement time (T+0 versus T+2) and lower reconciliation overhead (IOSCO, 2025).

Franklin Templeton's BENJI tokenized money market fund, which held more than $700 million in assets by late 2025, still operates through a traditional fund structure with the blockchain layer functioning as an additional record-keeping system alongside the existing transfer agent. The intermediaries have not been eliminated; their processes have been partially automated. JPMorgan's Onyx platform, which has processed over $900 billion in notional transaction volume through its tokenized repo products, similarly operates within the existing regulated financial infrastructure rather than replacing it.

The reality: tokenization compresses certain back-office processes and can reduce settlement risk, but the regulatory, legal, and custodial layers that represent the bulk of transaction costs in traditional finance remain largely intact at current scale.

Myth 2: Fractional Ownership Will Democratize Access to Green Infrastructure

The narrative that tokenization will allow retail investors to buy fractions of solar farms and wind projects for as little as $10 is technically possible but practically constrained. As of early 2026, the vast majority of tokenized RWAs are institutional-grade products: U.S. Treasuries (Ondo Finance's USDY, Mountain Protocol's USDM), private credit instruments (Centrifuge, Maple Finance), and real estate debt (RealT, Lofty). Direct fractional ownership of operational renewable energy infrastructure remains extremely rare.

The core obstacle is regulatory. In the United States, fractional ownership of income-producing assets like solar farms typically constitutes a securities offering subject to SEC registration or exemption requirements. Regulation D (accredited investors only) and Regulation A+ (limited to $75 million in offerings per year) are the most common pathways, both of which impose investor qualification requirements and offering size constraints that limit true democratization. A 2024 study by the Brookings Institution found that fewer than 4% of tokenized real estate offerings in the U.S. were accessible to non-accredited investors (Brookings Institution, 2024).

In practice, tokenization has broadened access within the institutional and accredited investor segments by lowering minimum investment sizes from $250,000 to $5,000 to $25,000, but the jump to $10 retail access for infrastructure assets remains constrained by securities law, investor protection requirements, and the economics of KYC/AML compliance on small transactions.

Myth 3: Tokenized Carbon Credits Solve the Double-Counting Problem

Blockchain advocates frequently argue that putting carbon credits on-chain inherently prevents double counting because every retirement is recorded on an immutable ledger. While this is technically true for on-chain transactions, the myth ignores the most common source of double counting, which occurs between national inventories and voluntary market transactions, not within a single registry.

Toucan Protocol and KlimaDAO demonstrated both the promise and the limitations of on-chain carbon markets. By early 2023, Toucan had bridged over 25 million tonnes of CO2-equivalent credits onto the Polygon blockchain. However, Verra, the largest carbon credit registry, suspended the bridging of its credits in 2023 due to concerns about quality dilution: tokens representing low-quality credits from older vintage years were being mixed with high-quality credits, undermining market integrity (Verra, 2023). The on-chain system faithfully recorded transactions but could not inherently distinguish credit quality, additionality, or vintage, which are the factors that actually determine environmental integrity.

The ICVCM's Core Carbon Principles framework, finalized in 2024, requires approved registries to maintain comprehensive tracking regardless of whether credits are tokenized. The reality: blockchain can improve transparency and transaction speed within a single market, but solving double counting requires institutional coordination between national registries, international bodies, and voluntary market platforms that extends far beyond what a distributed ledger alone can deliver.

Myth 4: Tokenization Provides Instant Liquidity for Illiquid Assets

The assumption that tokenizing an illiquid asset (such as a renewable energy project or a piece of commercial real estate) automatically creates a liquid market confuses the mechanism of exchange with the conditions for liquidity. Liquidity requires willing buyers and sellers, price discovery infrastructure, and sufficient market depth, none of which are guaranteed by issuing a token.

Data from secondary markets for tokenized real estate illustrate the point. RealT, one of the largest tokenized real estate platforms, reported that average daily trading volume for its property tokens was approximately $120,000 in 2025, spread across more than 500 individual property tokens (RealT, 2025). For many individual tokens, days pass without a single trade. Securitize's secondary marketplace for tokenized securities reported similar patterns: while marquee offerings attracted reasonable trading interest, the long tail of smaller offerings experienced minimal secondary market activity.

The Avalanche Foundation's partnership with JPMorgan on Project Guardian in Singapore showed that tokenized money market funds and government bonds can achieve meaningful liquidity, but these are already highly liquid asset classes. The tokenization layer added marginal convenience (24/7 settlement, cross-border composability) rather than creating liquidity where none existed. For genuinely illiquid assets like early-stage renewable energy projects, tokenization lowers the technical barriers to trading but does not solve the fundamental challenge of finding counterparties willing to price and trade these assets.

What's Working

Tokenized U.S. Treasuries represent the clearest product-market fit. BlackRock's BUIDL fund reached $500 million in assets within six months of launch, demonstrating institutional demand for on-chain cash management instruments. These products succeed because the underlying asset (U.S. government debt) is already well-understood, highly rated, and globally in demand; the tokenization layer adds operational efficiency rather than being asked to create entirely new markets.

Private credit tokenization through platforms like Centrifuge and Goldfinch has facilitated over $4.5 billion in loan originations to emerging market borrowers, including working capital facilities for sustainable agriculture and renewable energy companies in East Africa and Southeast Asia. These platforms have demonstrated that tokenized lending infrastructure can reduce origination costs and enable smaller loan sizes that traditional banks cannot economically process.

Renewable energy certificate (REC) tokenization is showing early traction. Energy Web Foundation's technology stack has been adopted by utilities and corporate buyers across 12 countries to tokenize and trade RECs with granular hourly matching capability, supporting 24/7 carbon-free energy procurement programs at Google, Microsoft, and others.

What's Not Working

Regulatory fragmentation across U.S. states and between the SEC and CFTC creates compliance uncertainty that chills institutional adoption. Tokenized assets that qualify as securities in one jurisdiction may be classified as commodities or utility tokens in another, forcing issuers to navigate a patchwork of requirements that increases legal costs and limits market reach.

On-chain carbon markets have not recovered from the quality concerns exposed in 2022 and 2023. Total value locked in on-chain carbon protocols fell from a peak of approximately $4 billion in 2022 to under $600 million by early 2026, as institutional buyers returned to traditional registries with established verification processes.

Interoperability between tokenization platforms remains limited. Assets tokenized on Ethereum cannot be seamlessly traded on Avalanche or Polygon without bridge infrastructure that introduces additional smart contract risk. The lack of a universal standard for tokenized RWAs forces issuers to choose platforms early, creating lock-in effects that contradict the open-market thesis of tokenization.

Key Players

Established: BlackRock (BUIDL tokenized Treasury fund), Franklin Templeton (BENJI on-chain fund), JPMorgan (Onyx tokenized repo and Project Guardian), Securitize (tokenized securities issuance and marketplace), Broadridge (DLT-based repo platform processing $1 trillion+)

Startups: Ondo Finance (tokenized Treasury products for DeFi), Centrifuge (tokenized private credit for real-world lending), RealT (fractional tokenized real estate), Energy Web Foundation (tokenized renewable energy certificates), Toucan Protocol (on-chain carbon credit infrastructure)

Investors: a16z Crypto (tokenization infrastructure and DeFi protocols), Coinbase Ventures (RWA platforms and on-chain finance), Galaxy Digital (digital asset infrastructure and tokenization), Brevan Howard Digital (institutional digital asset strategies)

Action Checklist

• Map which asset classes in your sustainability portfolio (carbon credits, RECs, green bonds, infrastructure equity) have viable tokenization pathways under current North American regulation
• Evaluate tokenized treasury and cash management products (BUIDL, USDY) as potential yield-bearing collateral for sustainability-linked instruments
• Require any tokenized carbon credit provider to demonstrate registry-level integration with Verra, Gold Standard, or ICVCM-approved systems before procurement
• Assess whether fractional ownership structures for green infrastructure qualify under Regulation D, Regulation A+, or equivalent Canadian securities exemptions
• Run a pilot with one tokenized REC platform to benchmark operational efficiency gains against existing procurement workflows
• Establish internal smart contract risk assessment criteria before committing capital to any on-chain asset structure

FAQ

Q: Should sustainability leads be evaluating tokenized carbon credits for their offset portfolios? A: Proceed with caution. Tokenized carbon credits can offer faster settlement and greater transparency within a single platform, but quality verification, vintage tracking, and additionality assessment remain dependent on off-chain processes managed by established registries. Only procure tokenized credits from platforms that maintain direct integration with Verra, Gold Standard, or ICVCM-approved registries. Avoid platforms that aggregate credits without transparent provenance data, as the quality dilution issues that affected earlier on-chain carbon markets have not been fully resolved.

Q: What is the realistic cost saving from tokenizing a green bond issuance? A: Based on completed issuances through Securitize, SIX Digital Exchange, and HSBC Orion, tokenized green bond issuances have achieved 15 to 30% cost reductions compared to traditional processes, primarily through compressed settlement cycles and reduced reconciliation overhead. However, these savings are most significant for issuances in the $10 million to $100 million range, where traditional fixed costs (legal, listing, custody) represent a larger percentage of total issuance cost. For large-scale issuances above $500 million, the percentage savings are more modest because fixed costs are already spread across a larger base.

Q: How should organizations assess the regulatory risk of tokenized RWA investments? A: Focus on three factors. First, whether the tokenized asset is offered through a registered broker-dealer or operating under a recognized regulatory exemption. Second, whether the custody arrangement involves a qualified custodian as defined by the SEC's custody rule. Third, whether the smart contract infrastructure has been audited by a reputable security firm. Organizations should also monitor the SEC's rulemaking on digital asset custody (proposed Rule 3a-2) and the CFTC's framework for tokenized commodities, both of which are expected to provide greater clarity by late 2026. Avoid platforms that operate in regulatory gray areas, as enforcement actions can freeze assets and create reputational risk.

Q: Is tokenized real estate a viable tool for greening property portfolios? A: Tokenized real estate is most viable as a financing mechanism rather than a portfolio greening tool. Platforms like RealT and Lofty enable fractional investment in individual properties, but the environmental attributes of those properties (energy efficiency, emissions intensity, green certifications) are determined by physical characteristics, not by the tokenization layer. Where tokenization can add value is in enabling green building bonds or retrofit financing at smaller ticket sizes, allowing property owners to raise capital from a broader investor base for energy efficiency upgrades. The token itself does not make the building greener, but it can make financing the green transition more accessible.

Sources

• rwa.xyz. (2026). Tokenized Asset Dashboard: Market Capitalization and Volume Tracker. New York: rwa.xyz.
• Boston Consulting Group. (2024). Relevance of On-Chain Asset Tokenization in Crypto Winter. Boston: BCG.
• International Organization of Securities Commissions. (2025). Policy Recommendations for Crypto and Digital Asset Markets: Tokenization of Traditional Financial Assets. Madrid: IOSCO.
• Brookings Institution. (2024). Tokenized Real Estate and Investor Access: Regulatory Frameworks and Participation Patterns in the United States. Washington, DC: Brookings.
• Verra. (2023). Public Consultation Summary: Tokenization of Verified Carbon Units. Washington, DC: Verra.
• Energy Web Foundation. (2025). Annual Impact Report: Tokenized Renewable Energy Certificates and 24/7 Matching. Zug: Energy Web Foundation.
• RealT. (2025). Annual Platform Report: Tokenized Real Estate Trading Volume and Investor Metrics. Miami: RealT Inc.
• Centrifuge. (2025). On-Chain Credit: Cumulative Origination Data and Borrower Impact Report. Berlin: Centrifuge GmbH.