Tokenization of Assets & Financial Products: The Trend in Motion
The concept of “tokenizing assets” (or issuing digital tokens to represent ownership or interests in real-world or traditional financial products) has moved from niche experiment to broad institutional interest. In essence, tokenization takes an underlying asset (which might be a share of equity, a debt instrument, a fund interest, or even real-estate, private‐credit, or other real-world asset) and overlays it with a digital token on a blockchain or distributed-ledger infrastructure.
So what is driving the trend now? A few factors:
- Institutional finance is looking to streamline and modernize middle and back-office processes (settlement, record-keeping, collateral use) where legacy systems remain slow, manual and fragmented.
- Real-world-asset (RWA) tokenization offers the opportunity to open up traditionally illiquid or restricted asset classes (private credit, real estate, fine art, private placements) to fractional ownership and broader investor access.
- Regulators and infrastructure providers are increasingly acknowledging that tokenized securities or tokenized assets are not simply “crypto” but can be regulated and integrated with existing capital-markets frameworks. For example, US SEC Commissioner Hester M. Peirce remarked that “tokenized securities are still securities” and the legal nature of the underlying asset doesn’t change simply because of the technology.
- The growing ecosystem, major custodians, banks, asset managers, are testing and launching tokenized instruments (funds, deposits, securities) which helps build credibility and scale.
- From a macro view, McKinsey and others note that tokenization is shifting from pilot to at-scale deployment.
The Goldman Sachs / BNY Mellon Example
Perhaps one of the most prominent recent examples: On July 23, 2025, Goldman Sachs and BNY Mellon announced a collaboration to launch tokenized money market funds (MMFs) for institutional clients.
Key details:
- BNY Mellon will offer tokenized versions of select money market fund share-classes via its LiquidityDirect platform; ownership and transaction records will be maintained on Goldman’s private blockchain system (GS DAP).
- Among the early participants: BlackRock, Fidelity, Federated Hermes.
- The benefits highlighted: real-time (or near real-time) settlement, 24/7 accessibility (versus traditional funds that settle only on business days), enhanced utility of the shares (for example use as collateral), and more efficient record-keeping.
- The initiative is notable because the U.S. MMF industry is large (many trillions of U.S. dollars) and moving even a slice of it onto token infrastructure represents a meaningful shift.
This initiative illustrates many of the benefits and enablers of tokenization in action. It also signals that major financial firms see strategic value (and competitive imperative) in adopting tokenized formats.
Other Regulatory & Market Developments
Beyond Goldman/BNY, several other developments point to the momentum:
- The Nasdaq Stock Market filed with the U.S. SEC to enable trading of tokenized securities (equities & ETPs) on its markets.
- The UK’s Financial Conduct Authority (FCA) published proposals to allow tokenization of investment funds (including direct-to-fund models) thus supporting fund tokenization broadly.
- A recent Reuters news item: U.S. Bancorp formed a dedicated digital assets & tokenization unit focused on asset tokenization, stablecoins, deposits etc.
- Industry data: According Forbes Real-World Asset Tokenization Hits $24 Billion, as of June 20, 2025.
Together, these developments show that tokenization is not just a niche experiment in crypto but increasingly an institutional-grade innovation in financial infrastructure.
What Are the Benefits of Tokenizing Assets?
From a straightforward standpoint, tokenization can provide a number of tangible benefits, many of which address real-pain-points in traditional markets:
- Improved Liquidity & Fractional Access
Tokenization enables assets to be broken into smaller units (tokens) so that a wider class of investors (including smaller investors) may gain exposure. Fractional ownership means an investor needn’t purchase the whole asset (real estate, private credit tranche, etc.). Also, when secondary trading platforms exist, tokenized assets may trade more freely. - Faster Settlement and Simpler Infrastructure
Traditional markets often involve multiple intermediaries (custody, clearing, settlement) and settlement may take days. Using distributed-ledger systems, tokens can settle near instantly or at least much faster, and processes can be automated (smart contracts). For example, the Goldman/BNY MMF token initiative emphasizes real-time settlement and near-24/7 access. - Enhanced Transparency and Ownership Tracking
A token ledger can provide an immutable record of who owns what, when ownership changed, and facilitate efficient audit/tracking. This addresses friction in manual ownership record-keeping, cap tables, transfer agent operations, etc. - Programmability and New Use-Cases
Tokens can embed logic (e.g., automatic dividend distribution, rights triggers, governance permissions) and enable assets to be used programmatically (e.g., as collateral in other transactions) or integrated into broader digital ecosystems. For example, as a speech by the SEC indicated: tokenized securities could be used as collateral without requiring full cash redemption. - Lower Costs and Broader Access
With fewer intermediaries, less manual reconciliation, and more automation, cost structures may improve. Also, by lowering the size-barrier and opening to new investor cohorts, access can broaden. McKinsey outlines that institutions with tokenization capabilities may gain a competitive advantage. - Global Reach & Seamless Transfers
Tokenized assets (properly structured) can move across borders, across time zones, and enable more seamless cross‐border investment and transfers. The BNY tokenized deposit pilot is indicative of cross‐border ambition. - Strategic Differentiation & Innovation Advantage
Firms that adopt tokenization early may gain strategic advantages (brand, cost, speed, product innovation) and better serve investor demands for digital asset exposure.
It’s Not All Magic
While tokenization offers compelling benefits, it is important (and compliant with Sound Disclosure) to note the challenges and limitations:
- The token is only as good as the underlying asset, legal structure, service providers, technology and regulatory compliance. Tokens don’t magically transform poor assets into valuable ones.
- Liquidity is still developing. Academic research finds that many tokenized real-world asset tokens languish with low trading volumes, limited investor participation, and vesting/whitelisting constraints.
- Regulatory and infrastructure frameworks are still evolving. For example, the Nasdaq filing and SEC filings show rule changes are still under review.
- Market participants must manage counter-party, custody, smart-contract, cyber risk, and integration risk between traditional finance and blockchain infrastructure.
- Standards, interoperability, and best practices (for token creation, transfer, settlement, compliance) remain nascent. Firms must ensure full regulatory compliance (especially for securities, AML/KYC, transfer restrictions).
- For many issuers/investors, the business case must be clear: tokenization must deliver incremental value (speed, cost, access) to justify change.
Why Rialto Markets Is Positioned to Lead
In this evolving landscape, Rialto Markets stands out as a compliant, proactive infrastructure provider well-positioned to help issuers and investors capture the benefits of tokenization in a regulated way.
Regulatory Readiness & Infrastructure
- Rialto Markets is a FINRA-member broker-dealer that operates in all 50 U.S. states (which shows breadth of licensing).
- The firm holds license that is SEC recognized for its Alternative Trading System (ATS) for secondary trading of securities (including digital securities).
- Rialto received regulatory authority (July 2025) to launch first-to-market ADR programs in digital format via the DSDC network (Digital Securities Depositary Corporation), a clear signal of regulatory alignment and digital-security competence.
Tokenization & Trading Infrastructure
- Rialto’s Enterprise Solutions (RiMES) offer white-label Broker-Dealer and secondary-trading infrastructure, including for digital securities, enabling clients to launch and manage private issuances (Reg CF, Reg A+, Reg D) and secondary trading in a regulated environment.
- Rialto combines capital-raising capabilities (primary issuance) with trading (secondary ATS) and digital-asset readiness, making it a holistic platform for issuers who want to tokenize or mobilize private-market securities.
- As noted in a CrowdfundInsider interview, Rialto spent ~two years working with FINRA and the SEC to enable digital securities trading, recognizing blockchain’s potential in private markets.
Market-Advantage vs Others
- While players such as Republic (via INX etc.) are making strides, some are still building regulatory/licensing bridges. Rialto Markets is already equipped with regulated broker-dealer, ATS, tokenization infrastructure and digital securities oversight. That gives Rialto Markets a head-start: issuers and investors who require full regulatory compliance, digital-security readiness and secondary-market access may prefer a partner that is already licensed and operational.
- By emphasizing regulated, compliant tokenization (rather than “unregistered crypto tokens”) Rialto Markets aligns with the trend of institutional adoption and regulatory comfort rather than pure retail, unregulated experiments.
The tokenization of assets and traditionally considered financial products is gaining serious momentum driven by real-world institutional initiatives, regulatory progress, and the promise of faster, more efficient, more accessible capital markets. The recent announcement by Goldman Sachs & BNY Mellon of tokenized money market funds is just one powerful example of the shift.
For issuers and investors, tokenization offers benefits: improved settlement, fractional access, programmable ownership and enhanced transparency provided the structure is compliant and the infrastructure is robust.
In this dynamic environment, Rialto Markets stands out as a regulated, fully-licensed broker-dealer and ATS with digital-securities capabilities already in place. By choosing Rialto Markets as a partner, issuers and investors gain access to tokenization in a compliant, institutional-grade manner while many others are still building the bridge.
As the industry moves from “early pilot” to “real-world scale”, the choice of partner, infrastructure and regulatory readiness will become a key competitive differentiator. With Rialto Markets, clients can engage in tokenization knowing the regulatory framework, marketplace dynamics and technology are aligned.
Disclaimer:
This document is provided for informational purposes only and does not constitute an offer to sell or a solicitation to buy any securities or digital assets. The concepts discussed herein are illustrative and do not represent investment advice. Any digital asset or tokenization project must comply with applicable laws and regulations, including those of the SEC and FINRA. Secondary markets for digital or tokenized securities remain limited; investors may not be able to resell tokens readily or at favorable prices. Readers should consult with legal and financial professionals before making investment decisions. Rialto Markets, LLC is a registered broker-dealer and member FINRA/SIPC.
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