‘Contrary to popular belief,’ regulation isn’t slowing tokenization — Prometheum CEO
The market for tokenized real-world assets (RWAs) is growing by the day, but contrary to belief, the biggest hurdle to broader adoption isn’t regulation, but a lack of dedicated secondary markets for buying and selling tokenized securities, according to Prometheum founder and co-CEO Aaron Kaplan.
In an interview with Cointelegraph, Kaplan drew attention to ARK Invest CEO Cathie Wood’s recent appearance at the Digital Asset Summit in New York, where she said that a lack of regulatory clarity is preventing her company from tokenizing its funds.
“Contrary to popular belief, however, the hurdle isn’t ambiguous regulation,” said Kaplan, who noted that the US Securities and Exchange Commission’s (SEC) special purpose broker-dealer framework and Alternative Trading System (ATS) licensing “already provide a regulated pathway for issuing blockchain-native funds that offer efficiency advantages over traditional issuances.”
“The real bottleneck lies in the limited market infrastructure for delivering tokenized securities trading to a broad investor base,” he said.
Excluding stablecoins, the value of tokenized RWAs has increased by nearly 8% to $19.5 billion over the past 30 days, according to industry data. Private credit and US Treasury debt remain the two largest use cases.
The value of tokenized RWAs has grown rapidly over the past year. Source: RWA.xyz
“These assets currently sit on a handful of blockchains, but there is still no fully public secondary market where institutional and retail investors can buy, sell, and trade them, as they do with traditional securities on Nasdaq or through a brokerage account like Fidelity,” said Kaplan, who identified two general approaches for building out these platforms.
The first is building tokenized securities markets using decentralized finance (DeFi) frameworks, much like what Ondo Finance, Ethena Labs and Securitize are doing.
Related: Ethena Labs, Securitize launch blockchain for DeFi and tokenized assets
The second approach involves integrating tokenization protocols into existing brokerage platforms that operate under SEC-registered entities and are subject to federal securities laws.
“Legacy crypto and fintech platforms are already accustomed to facilitating cryptocurrency trading, so you would expect them to seek to broaden their offerings to include tokenized securities,” said Kaplan.
While many in the latter camp do not operate digitally, they “won’t cede market share without a fight,” said Kaplan. “Many are already investing in their own tokenization initiatives, or partnering with fintech and crypto firms, to remain competitive.”
“What’s at stake is the next wave of users onboarding into the digital asset space […] The question is then, will the brokerage industry enter the digital asset space, or will crypto platforms build the next gen markets for investors to buy and sell digital securities?”
As a digital asset trading and custody firm, Prometheum is attempting to bridge the infrastructure gap by building a full-service digital asset securities marketplace. The company claims that securities traded on Prometheum have reduced fees, faster settlement times and increased efficiency.
Related: CME Group taps Google Cloud for pilot asset tokenization program
Investors want ‘digital native’ versions of assets they’ve always known
Perhaps the biggest demand driver for tokenized assets among traditional investors is that they want to access “digital native versions of all assets, in addition to crypto tokens, through a single ecosystem they are comfortably using […] to meet a range of financial goals,” said Kaplan.
One area where tokenization appears to be gaining traction is in real estate. As Cointelegraph recently reported, luxury and commercial properties are being tokenized all over North America and secondary markets are being established to enable the trading of tokenized shares.
A 2024 report by Boston Consulting Group (BCG) called tokenization a “game-changing blockchain use case in financial services” due to its scalability and near-instant transactions.
According to BCG managing director and senior partner Sean Park, tokenization could boost investors’ annual returns by roughly $100 billion while increasing the revenue streams of financial institutions.
Tokenized RWAs as an investable asset class reached an “inflection point” in 2023. Source: Boston Consulting Group
The potential of tokenization has even been flagged by the World Economic Forum in a recent article published by Digital Asset co-founder and CEO Yuvan Rooz.
In the article, Rooz showed that roughly 10% of the $230 trillion global securities market is eligible for use as collateral.
“Tokenization, which improves collateral mobility and capital efficiency, could unlock this untapped capital and optimize intraday liquidity so that funds can be accessed and moved within the same trading day to meet payment and settlement obligations,” said Rooz.
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VanEck plans to launch a private digital assets fund in June targeting tokenized Web3 projects built on the Avalanche blockchain network, the asset manager said in a statement shared with Cointelegraph.
The VanEck PurposeBuilt Fund, available only to accredited investors, aims to invest in liquid tokens and venture-backed projects across Web3 sectors, including gaming, financial services, payments, and artificial intelligence.
Idle capital will be deployed into Avalanche (AVAX) real-world asset (RWA) products, including tokenized money market funds, VanEck said.
The fund will be managed by the team behind VanEck’s Digital Assets Alpha Fund (DAAF), which oversees more than $100 million in net assets as of May 21.
“The next wave of value in crypto will come from real businesses, not more infrastructure,” Pranav Kanade, portfolio manager for DAAF, said in a statement.
Related: Tokenized stocks could top $1T in market cap — Execs
Thematic crypto funds
VanEck’s PurposeBuilt Fund is the latest in a series of funds from the asset manager and rivals designed to offer exposure to projects and companies in fast-growing segments of Web3.
On May 14, VanEck launched a new actively managed exchange-traded fund (ETF) to invest in stocks and financial instruments providing exposure to the digital economy.
In April, VanEck launched another ETF investing in a passive index of companies operating in the crypto space.
Asset managers such as VanEck are requesting the US Securities and Exchange Commission’s (SEC) permission to list upward of 70 crypto ETFs.
The wave of ETF filings is in response to US President Donald Trump softening the agency’s regulatory stance toward crypto after Trump took office in January.
Avalanche RWA ecosystem
Avalanche has emerged as a hub for real-world assets (RWAs) and other institutional-oriented crypto projects.
Its interrelated networks, called subnets, allow institutions to run Ethereum-style smart contracts in a controlled environment. On May 16, Solv Protocol launched a yield-bearing Bitcoin token on the Avalanche blockchain, targeting institutional investors
Avalanche has around $1.5 billion in total value locked (TVL) as of May 21, according to data from DefiLlama.
“We’re seeing a shift away from speculative hype toward real utility and sustainable token economies,” John Nahas, chief business officer at Ava Labs, said in a statement.
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A Democratic representative in the US Congress will support a blockchain bill at a time when many left-leaning lawmakers are blocking crypto-related pieces of legislation due to concerns with President Donald Trump’s potential conflicts of interest.
In a May 21 notice, Minnesota Representative Tom Emmer said he had reintroduced the Blockchain Regulatory Certainty Act, a bill that “solidifies that digital asset developers and service providers that do not custody consumer funds are not money transmitters.”Emmer, a Republican, said Democratic Representative Ritchie Torres would co-lead the bill, making it a bipartisan effort in Congress.
“The Blockchain Regulatory Certainty Act reflects a thoughtful, bipartisan effort to get digital asset policy right,” said Torres. “While similar language was voted down in markup last Congress, we took that feedback seriously and returned with a smarter, sharper framework that protects innovation without compromising oversight.”
Representatives of advocacy organizations, including the Crypto Council for Innovation, Solana Policy Institute, Digital Chamber, Coin Center, DeFi Education Fund and Blockchain Association, said they would support the proposed blockchain regulatory bill. It was unclear whether Emmer and Torres had a majority of votes in the House of Representatives for the legislation to pass.
Torres has supported many bills and policies favorable to the crypto industry since assuming office in 2021. Together with Emmer, he has led the Congressional Crypto Caucus to advance crypto-friendly policies in the House since March.
A bipartisan blockchain bill amid memecoin concerns?
Other Democratic House members, including Representative Maxine Waters, have suggested they intend to block any legislation related to crypto and blockchain until Republicans address Trump’s connections to the industry, such as his family’s stake in World Liberty Financial and his TRUMP memecoin. The president is planning to host a dinner with up to 220 people holding the most significant amounts of his memecoin on May 22.
Related: Interest groups, lawmakers to protest Trump’s memecoin dinner
Cointelegraph reached out to Torres’ office for comment but had not received a response at the time of publication.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
Democratic leaning organizations and members of Congress have announced plans to protest what they describe as the sale of access to the office of the US president, in reference to Donald Trump’s memecoin dinner on May 22. The event’s attendees are said to have collectively spent over $100 million for the chance to meet with the US president.
Since Trump’s memecoin project, Official Trump (TRUMP), announced that its top 220 tokenholders would have an opportunity to apply for an exclusive dinner with the president, many leaders in the crypto industry and US lawmakers have criticized the event, saying Trump was opening his office to potential bribery and corruption.
The memecoin dinner prompted some Democratic lawmakers to withdraw support for crypto-related legislation in Congress, including the market structure and stablecoin bills.
“Trump collecting gifts from foreign governments is unconstitutional,” a spokesperson for the consumer advocacy organization Public Citizen, which is planning to protest near the memecoin dinner on May 22, told Cointelegraph. “Collecting foreign government investments through his memecoin is not much better. American foreign policy should not be for sale.”
Crypto industry figures such as Tron founder Justin Sun, Kronos Research chief investment officer Vincent Liu, Hyperithm co-CEO Oh Sangrok, and Synthetix founder Kain Warwick are among the tokenholders expected to attend the dinner at the Trump National Golf Club outside Washington, DC. The memecoin project said all applicants had to pass a background check and could not be from a “[Know Your Customer] watchlist country.”
Related: Democrats seek suspicious activity reports linked to Trump crypto ventures
Public Citizen, in partnership with progressive political organization Our Revolution, will hold a rally near the golf club, which Oregon Senator Jeff Merkley is expected to attend. In addition, the Arlington and Loudoun Democrats will be hosting a separate event to urge US officials to “hold [Trump] accountable,” and Democratic leadership in Congress has scheduled two press events on May 22 ahead of the dinner.
“Americans cannot and will not accept President Trump’s view that positions of power exist only to benefit the holder of that power,” Ryan Ruzic, chair of the Loudoun County Democratic Committee, told Cointelegraph. “We have a moral responsibility to speak out against corruption, whatever the result may be.”
Pushback on TRUMP memecoin affected crypto legislation
Some lawmakers initially cited the memecoin dinner and the Trump family’s involvement with the crypto platform World Liberty Financial in opposing passage of the GENIUS Act, a bill to regulate payment stablecoins. World Liberty Financial began issuing its own USD1 stablecoin in March, prompting concerns about Trump’s conflicts of interest. However, the legislation passed a key procedural vote in the Senate on May 19 with support from Democrats, setting the bill up for debate in the chamber.
“Many senators, myself included, have very real concerns about the Trump family’s use of crypto technologies to evade oversight, hide shady financial dealings, and personally profit at the expense of everyday Americans,” said Sen. Mark Warner in a statement before the May 19 vote, adding: “But we cannot allow that corruption to blind us to the broader reality: blockchain technology is here to stay.”
Senator Chris Murphy, who voted against advancing the GENIUS Act, called for bipartisan support in amending the bill to specifically bar a US president from issuing stablecoins. He also called on the White House to release a complete list of attendees to the memecoin dinner, suggesting that some or all of them would “try to get something from the president” in exchange for purchasing the tokens.
Murphy and Senator Elizabeth Warren will attend a press event with representatives for Public Citizen on May 22. California Representative Maxine Waters, ranking member of the US House Financial Services Committee, announced a separate press conference for the same day, with plans to introduce a bill to “block Trump’s memecoin and stop his crypto corruption, once and for all.”
As of May 21, the exact number of attendees to the dinner was unknown. A smaller group of 25 tokenholders also qualified to apply for “VIP tour” and reception — presumably at the White House — with Trump, but the complete list of those planning to attend was also unknown at the time of publication.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
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