Tokenization Shifts Focus to Building Functional Markets

The concept of tokenization has been selling the idea that putting an asset on a blockchain can make finance faster, cheaper, and more accessible. This pitch worked, with companies like BlackRock tokenizing money-market funds and Treasuries moving onchain. However, after the token exists, the question remains: what happens next?

In July, the Depository Trust & Clearing Corporation successfully processed tokenized securities in real production trades involving over 30 financial institutions and market participants. These tests went beyond simply issuing an asset onchain and included Treasury repo transactions, securities lending, collateral pledges, equity settlement, and margin workflows.

Another milestone was reached when Ondo Finance became the first tokenization company to join DTCC's Fund/SERV infrastructure, which processes over 85% of U.S. mutual-fund transaction activity.

The industry is shifting towards building a functioning market around tokenized assets, rather than just putting them onchain. However, this requires more than just issuing a token - it needs liquidity, verification of collateral, cash movement, legal rights enforcement, record reconciliation, and buyer exit guarantees.