‘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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PayPal says the US Securities and Exchange Commission has abandoned its investigation into the payment giant’s US-dollar stablecoin.
PayPal said in an April 29 regulatory filing that the SEC concluded its investigation into PayPal USD (PYUSD) and wouldn’t be taking any action.
The company said it received a subpoena from the SEC’s Division of Enforcement over its stablecoin in November 2023.
“The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request,” PayPal stated at the time.
In its latest filing, the firm said the SEC notified it in February that the agency “was closing this inquiry without enforcement action.”
PayPal has said its stablecoin is 100% redeemable for US dollars and “fully backed” by dollar deposits, including short-term treasuries and cash equivalents.
However, the stablecoin has struggled to gain momentum in a crowded market dominated by rivals Tether and Circle. PYUSD has a market capitalization of just $880 million, less than 1% of Tether’s (USDT) $148.5 billion.
PayPal’s stablecoin has seen better growth this year with a 75% increase in PYUSD circulating supply since the beginning of 2025, according to CoinGecko. It remains down 14% from its peak supply of just over $1 billion in August 2024.
Earnings on PYUSD, Coinbase partnership
That growth could be bolstered by a company announcement on April 23 introducing rewards for PYUSD in a new loyalty offering that will enable US users to earn 3.7% annually for holding the asset on the platform.
Meanwhile, on April 24, PayPal announced a partnership with Coinbase to increase the adoption of PYUSD.
“We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting PYUSD at the center,” said Alex Chriss, PayPal President and CEO.
Related: PayPal to offer 3.7% yield on stablecoin balances: Report
The payments giant also reported robust first-quarter earnings and the completion of significant share repurchase activities.
The firm beat Wall Street estimates, earning $1.33 per share in the first quarter, topping analyst expectations of $1.16. Revenue rose 1% from a year before to $7.8 billion.
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Asset manager BlackRock has filed to create digital ledger technology shares from one of the firm’s money market funds, which will leverage blockchain technology to maintain a mirror record of share ownership for investors.
The DLT shares will track BlackRock’s BLF Treasury Trust Fund (TTTXX), which may only be purchased from BlackRock Advisors and The Bank of New York Mellon (BNY), the firm said in its April 29 Form N-1A filing with the Securities and Exchange Commission.
The money market fund holds over $150 million worth of assets, invested almost entirely in US Treasury bills and cash.
BlackRock said that the shares “are expected to be purchased and held through BNY, which intends to use blockchain technology to maintain a mirror record of share ownership for its customers.”
Unlike the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), DLT shares won’t be tokenized but will instead be used as a transparency tool to verify ownership.
BlackRock will continue to maintain traditional book-entry records as the official ownership ledger.
BlackRock didn’t propose a ticker or set a management fee for the DLT shares in its filing.
A minimum initial investment of $3 million worth of DLT is required for institutions seeking to purchase the digital shares.
BlackRock follows Fidelity’s March 21 filing to list an Ethereum-based OnChain share class, which seeks to track the Fidelity Treasury Digital Fund (FYHXX) — an $80 million fund consisting almost entirely of US Treasury bills.
While the OnChain share class filing is pending regulatory approval, Fidelity expects it to take effect on May 30.
Wall Street heavyweights continue to explore blockchain use cases
Asset managers have increasingly turned to blockchain to tokenize Treasury bills, bonds and private credit over the past few years.
Related: BlackRock Bitcoin ETF buys $970M in BTC as inflows surge, boost market
The treasury tokenization market is currently valued at $6.16 billion, led by BlackRock’s BUIDL at $2.55 billion, while the Franklin Templeton-issued Franklin OnChain US Government Money Fund (BENJI) secures over $700 million worth of real-world assets, according to rwa.xyz.
Ethereum remains the chain of choice for tokenizing treasury assets, and currently houses over $4.55 billion worth, while the Stellar network and Solana round out the top three at $474.9 million and $274.5 million, respectively.
The potential of RWA tokenization has also been championed by BlackRock’s CEO, Larry Fink, who believes the technology could revolutionize investing.
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The US Treasury Department’s Office of Foreign Assets Control can’t restore or reimpose sanctions against the crypto mixing service Tornado Cash, a US federal court has ruled.
Austin federal court judge Robert Pitman said in an April 28 judgment that OFAC’s sanctions on Tornado Cash were unlawful and that the agency was “permanently enjoined from enforcing” sanctions.
Tornado Cash users led by Joseph Van Loon had sued the Treasury, arguing that OFAC’s addition of the platform’s smart contract addresses to its Specially Designated Nationals and Blocked Persons (SDN) list was “not in accordance with law.”
OFAC had sanctioned Tornado Cash in August 2022, accusing the protocol of helping launder crypto stolen by the North Korean hacking collective, the Lazarus Group.
The agency dropped the platform from the sanctions list on March 21 and argued that the matter was “moot” after a court ruled in favor of Tornado Cash in January.
This latest amended ruling prevents OFAC from re-sanctioning Tornado Cash or putting it back on the blacklist.
Initially, the court denied a motion for partial summary judgment and granted in favour of the Treasury. However, the Fifth Circuit reversed the decision and instructed the lower court to grant partial summary judgment to the plaintiffs, which led to the sanctions being revoked.
In March, the Treasury argued there was no need for a final court judgment in the lawsuit.
Crypto body petitions White House over Tornado Cash
On April 28, the DeFi Education Fund petitioned White House crypto czar David Sacks to have prosecutors drop charges against Tornado Cash co-founder Roman Storm.
Related: Samourai Wallet, feds ask for time to mull dropping crypto mixer case
Storm was charged in August 2023 with helping launder over $1 billion in crypto through the protocol, and his trial is still set for July.
The group said that the Department of Justice was attempting to hold software developers criminally liable for how others use their code, which they argued was “not only absurd in principle, but it sets a precedent that potentially chills all crypto development in the United States.”
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