Disclaimer: The perspectives and opinions expressed here are solely those of the author and do not reflect the views or opinions of the editorial team.
The tokenization of real-world assets is frequently heralded as a transformative force in finance, as it promises to enhance asset issuance efficiency, bolster transparency, and expand investment possibilities. However, amid this enthusiasm, there is a noticeable emphasis on regulation—particularly the Markets in Crypto-Assets Regulation (MiCA). Many believe that MiCA will pave the way for RWA tokenization, but its actual influence on institutional adoption is rather limited.
Certainly, MiCA is a vital framework for various types of digital assets, yet it does not extend to tokenized securities such as corporate bonds, equities, or structured debt, which fall under the authority of MiFID II, the Prospectus Regulation, AIFMD, and UCITS. Therefore, while MiCA holds significance, its narrow focus excludes most tokenized financial instruments from its direct regulatory scope.
The Limited Reach of MiCA
MiCA is often viewed as a significant advancement in the regulation of digital assets, contributing necessary clarity to matters such as stablecoins and unregulated cryptocurrencies. Nonetheless, in the context of real-world assets, its range is much more confined than many recognize. MiCA mainly pertains to crypto-assets that are not classified as securities, including E-Money Tokens (EMTs), utility tokens, and asset-referenced tokens (ARTs)—which are typically tied to commodities like oil or gold.
The regulation does not cover financial instruments that are already regulated by existing laws. For example, tokenized versions of securities, including corporate bonds, equities, and securitized debt, are still governed by MiFID II, the Prospectus Regulation, AIFMD, and UCITS.
Due to these exclusions, financial institutions aren’t patiently awaiting MiCA’s endorsement to proceed with tokenizing real-world assets. Instead, they are concentrating on the regulations that have historically managed these assets and adjusting their approaches within those established frameworks.
Innovation in the Private Sector: A Historical Constant
There is a prevalent myth that financial innovation is primarily driven by regulation. In reality, it is typically the other way around. Market evolution results from institutions striving for efficiency, leading to subsequent regulatory adaptations.
Consider how finance has progressed over time. We transitioned from paper stock certificates to digital records and from traditional trading floors to electronic exchanges. These transformations were not exclusively driven by regulations but were largely due to financial entities recognizing the advantages of new technologies and widely implementing them.
The trend of tokenization is progressing in a similar vein. It is not a complete overhaul of the financial ecosystem, but a modernization of how traditional assets are issued, transferred, and managed. The fundamental financial products—bonds, equities, structured debt, and private market instruments—remain unchanged; however, their management processes have advanced. Blockchain now facilitates faster, more automated, and more transparent operations.
This is why MiCA is not the pivotal influence on RWA tokenization. The institutions that handle these assets are already operating within the existing regulatory frameworks, incorporating blockchain where it is beneficial.
Institutional Adoption: Leading the Charge
While some speculate that web3 startups or crypto-native platforms will spearhead RWA tokenization, the reality is that large financial institutions have the greatest stakes, the deepest market insights, and the most robust regulatory experience. They are the ones truly driving substantial adoption, likely using established web3 infrastructures to integrate blockchain into conventional finance. Consequently, these platforms must adhere to DORA’s cybersecurity and operational resilience mandates while remaining user-friendly, adaptable to various financial institutions, and flexible enough to align with clients’ structures and preferences.
Investment banks and asset managers are already significant participants in structured finance and securitization, where tokenization provides substantial advantages: quicker settlements, automated compliance, and reduced costs. Pension funds and endowments are exploring tokenized private market assets—like private equity and debt—as a means of enhancing liquidity in traditionally illiquid markets. Retail banks could potentially offer tokenized bonds and fixed-income products in fractionalized formats, broadening accessibility for a wider investor base. Each entity has distinct motivations for investigating tokenization, though they all seek improved efficiency. These institutions are at the forefront because the business rationale for blockchain is convincing.
Blockchain-based solutions can equip financial actors with tools to decrease settlement times, minimize administrative burdens, and enhance the transparency of ownership and transactions.
Primary Issuance Represents the True Opportunity
Tokenization is currently the topic of much discussion, with many suggesting it will revolutionize secondary trading. However, most financial institutions are not prioritizing this at the moment. Instead, the real excitement lies in primary issuance—the creation and distribution of new financial assets.
Today, when a firm seeks to issue a bond, it encounters numerous intermediaries, complex legal requirements, and slow, manual processes. Tokenization simplifies these challenges by embedding compliance rules directly into smart contracts, automating post-trade reporting, and reducing the need for intermediaries.
This is why major financial players are already exploring tokenized primary issuance. Platforms such as JPMorgan’s Onyx facilitate blockchain-based settlements, Goldman Sachs has effectively tested tokenized bond issuances, and BlackRock has introduced a digital liquidity fund on Ethereum (ETH). Franklin Templeton has also issued tokenized funds on the Stellar blockchain. These are not hypothetical scenarios; they represent real-world instances of institutions applying blockchain in the most effective ways. The objective is to enhance the efficiency of asset issuance.
Financial institutions are evaluating both permissioned and permissionless blockchains, depending on their specific regulatory, operational, and market demands. This dual approach acknowledges that some participants prefer the controlled conditions of permissioned networks, while others are beginning to harness the transparency, composability, and global investor access provided by public blockchains.
The Industrialization of Finance is Already in Motion
If blockchain adoption continues on its current path, we are progressing toward what could be described as the industrialization of finance. Much like manufacturing grew more efficient with assembly-line automation, financial markets are gradually evolving toward faster, more scalable, and more automated processes—and tokenization is a key part of this transition.
However, for tokenization to gain traction in traditional finance, it must adhere to existing rules and standards. This entails compliance with MiFID II, alignment with the Prospectus Regulation, and, crucially, adherence to DORA, which mandates stringent cybersecurity and risk management protocols for any blockchain infrastructure intertwined with financial institutions.
Conclusion
MiCA is undeniably a significant development in the realm of digital asset regulation, yet it is not poised to be the primary catalyst for the widespread tokenization of real-world assets. Financial institutions are not waiting for MiCA’s rollout, as the key assets designated for tokenization are already governed by established financial regulations that they engage with routinely.
The true driving forces behind RWA tokenization are the financial market participants and their relentless quest for efficiency. Financial institutions will persist in integrating blockchain where it is advantageous.
While MiCA will undoubtedly impact certain segments of the digital asset landscape—especially crypto-native projects and stablecoins—it will not be the framework that molds the future of tokenized finance. That future is being shaped by the institutions already navigating the market today.