Will tokenization accelerate the adoption of blockchain technology?

Hodl Team
Hodl Team
17 June 2025
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Tokenization is a term that has been gaining momentum in recent years—and for good reason. But can it truly drive the next wave of blockchain adoption?

Tokenization: The bridge to broader blockchain adoption

Tokenization refers to the process of converting physical or traditional financial assets—such as real estate or bonds—into digital tokens on a blockchain. These tokens represent ownership rights and can be traded seamlessly, which not only increases liquidity but also promotes the use of blockchain technology in sectors where it was previously absent.

A notable example is BlackRock’s launch of the USD Institutional Digital Liquidity Fund (BUIDL) in March 2024. This tokenized money market fund, issued on the Ethereum blockchain, allows institutional investors to gain exposure to a digital representation of short-term U.S. Treasuries. Within weeks, the fund reached $657 million in assets under management. Today, well-over a year later, it operates across seven public blockchains and manages nearly $3 billion in assets.

The benefits of tokenization for blockchain adoption

Tokenization offers several advantages that not only modernize financial markets but also accelerate blockchain adoption. Most notably, it improves the liquidity of traditionally illiquid assets—such as real estate or private equity—by making tokens tradable 24/7 on blockchain-based platforms. This facilitates the emergence of secondary markets powered by blockchain infrastructure.

Moreover, tokenization lowers entry barriers. By bringing assets onto the blockchain, they can be easily fractionalized. Where ownership of an artwork or property was once reserved for a single investor, it can now be divided into smaller shares. This opens up access to high-quality investments for a broader investor base, further embedding blockchain into financial ecosystems.

The technology also introduces enhanced transparency through on-chain registration of ownership, transactions, and valuations—strengthening trust in blockchain-based solutions as alternatives to legacy systems.

Lastly, tokenization enables the use of smart contracts, allowing for automated processes such as dividend distributions, voting rights, or compliance checks. This level of automation showcases blockchain’s potential to improve operational efficiency—without intermediaries, added complexity, or unnecessary costs.

Institutional adoption of tokenization as a catalyst

The embrace of tokenization by institutional investors acts as a major catalyst for broader blockchain adoption. According to a study by EY, 50% of institutional investors are interested in investing in tokenized assets, including alternative funds, public funds, and real estate. Additionally, 44% of asset managers are considering tokenizing their own assets in the coming years.

This trend is reinforced by strategic partnerships between traditional financial institutions and blockchain companies. One example is the collaboration between State Street and Swiss crypto firm Taurus, aimed at providing digital asset services, including the tokenization of real-world assets. When names like State Street and BlackRock enter the space, it lowers the psychological barrier for others to follow.

Tokenization: The future of finance?

According to RWA.XYZ, the total market for tokenized assets has already surpassed $23 billion, up from just $5 billion in early 2023. Future projections vary. Consulting firm McKinsey & Company estimates the tokenized asset market could grow to $2–4 trillion by 2030, providing room for significant growth.
At Hodl, we see tokenization as a powerful force for blockchain adoption in the years ahead—especially within traditional financial structures. Its tangible benefits—such as liquidity, transparency, and automation—make it a superior technology with lasting potential.

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