Tokenizing Gold, US Equities? No — Illiquid Is Key, Expert Says

Tokenization of real-world assets (RWAs) must move beyond replicating traditional assets on-chain and instead focus on areas where blockchain-native features provide clear advantages, according to Standard Chartered's Head of Digital Assets Research, Geoffrey Kendrick.

In the bank's latest global research note sent to Benzinga, Kendrick pointed to the underperformance of non-stablecoin tokenization efforts and argued that success will come if projects "focus on the right areas (where being on-chain adds value)."

He noted that tokenizing already liquid assets, such as gold and U.S. equities, has struggled to gain traction precisely because their on-chain equivalents offer limited additional utility.

Kendrick cited the rise of tokenized private credit as an example of effective implementation, suggesting that "the next successes will come from private equity and otherwise illiquid commodities."

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These asset classes, he implied, offer more natural use cases for blockchain-based finance due to their historically limited liquidity and cumbersome settlement processes.

While stablecoins continue to dominate the RWA tokenization space, with non-stablecoin RWAs comprising only around 10% of the market, the report sees "significant growth potential" if regulatory and technical hurdles are addressed.

The analysis notes that regulatory support is beginning to emerge in jurisdictions such as Singapore, Switzerland, the EU, and Jersey, but inconsistencies in know your customer (KYC) enforcement remain a limiting factor.

Standard Chartered's report emphasizes that value-added use cases such as improving settlement speeds, unlocking new liquidity, or solving on-chain-specific financial needs should guide future tokenization strategies.

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