Asset tokenisation has emerged as one of the most discussed developments across digital finance. It is believed this form of tokenisation can unlock liquidity in historically illiquid asset classes. Its concept is straightforward - it converts real-world assets such as real estate, private credit, commodities and equities into tokens on the blockchain. This process enables the transfer of ownership to the blockchain and provides investors with wider access to markets which were previously hard to access. However, industry players say tokenisation is not the answer to the liquidity issue. At Paris Blockchain Week 2026, Ondo Finance’s EMEA Sales Director, Oya Celiktemur, challenged the idea that blockchain technology can turn illiquid assets into actively traded investments, stating: “I think there’s still this idea that tokenising something illiquid will somehow magically make it a liquid asset, which is just not true,” adding that “assets like real estate and private credit were never that liquid to begin with.” The discussion comes as the tokenised real-world asset (RWA) sector continues to expand, with attention increasingly shifting from issuance growth to whether tokenised products can generate meaningful market activity and move beyond their currently limited distribution channels. Certainly, Larry Fink’s vision of tokenisation goes far beyond digitising ownership. The real transformation begins when assets become programmable, enabling them to move seamlessly across settlement networks, treasury systems, collateral pools and financial markets in real time.
CEO of the world’s biggest asset manager, Larry Fink
Source:X
The value of tokenisation is highest in markets that have liquidity and demand. In these sectors the problem is not having buyers or sellers, but it is the inefficiencies existing in legacy financial infrastructure. The settlement process is delayed, too complex, plus access to markets is limited whereby causing friction and impeding capital flows. By streamlining these processes, tokenisation enhances efficiency and accessibility without creating new liquidity. A good example of where tokenisation brings value are government bonds, publicly traded stocks, ETFs and institutional investment products. They already have a strong liquid and active market but they still use the old system of infrastructure which slows down the capital movement. Many cross-border transactions are inefficient, and settlement delays and complicated reconciliation increase costs and lower efficiency. Tokenisation is used to resolve these functional issues. Digital tokens simplify the transfer of assets, enhance record-keeping and cut administrative load. In addition, the technology enables a fractional ownership model, thereby increasing investors’ access. This finally enables assets to flow more smoothly within financial networks whilst maintaining the demand for liquidity. This is important to note because, whilst tokenisation enhances market infrastructure, liquidity ultimately relies on investor demand and continued participation in the market.
Liquidity and demand are still the key issues to the tokenisation debate. Liquidity is created when people are constantly buying and selling in the market, producing a depth of market for efficient transactions. Technology enables transactions and plays a crucial role in securing market access but cannot force investors to exchange assets in which there is no demand. Francesco Ranieri Fabracci, from Tether, reinforced this during the Paris Blockchain Week panel when he said: “It’s not that if you put an asset on-chain, it will be liquid. It doesn’t work like that at all.” He further explained that bonds, stablecoins and money market funds have a greater chance of maintaining liquidity because they already attract broad investor interest. This is also true in real estate and with private credit. In the past, such assets have had lower trading volume than public securities. Whilst tokenisation makes the process of transferring ownership and accessibility easier, it does not change the dynamics of the markets that prevent market participation. In essence, liquidity is determined by demand and not technology. Thus, blockchain infrastructure can complement existing assets that are attracting investors, and tokens with low demand may still be facing difficulties even after tokenisation.
ssets that draw in capital and participation. Strong markets create liquidity and tokenisation simply improves how that liquidity is accessed, transferred and utilised.
The liquidity development of tokens on the RWA market is also proof that the demand is the main pollinator of supply and is the real driver of liquidity. RWA.xyz reports the total value of tokenised RWAs increased from about $8.8 billion in April 2025 to nearly $29.9 billion in April 2026. Whilst there is growth in a few categories, much growth is attributed to standardised assets which already have strong demand from investors and existing market activity. Other segments also had significant growth; alongside the growth in asset-backed credit, the significant growth in corporate credit recorded was due to the trend of credit issuance in the RWA market. Meanwhile, tokenised real estate and private equity show a strong percentage growth with the number of tokens rising from approximately $35 million to $296 million and from about $60M to $223M respectively. Yet, despite this growth, these categories remain relatively small compared with Tokenised US Treasury Products. This indicates that a rise in the number of outstanding shares does not always lead to a rise in liquidity, as the market capitalisation can rise from new shares issued even if trading on the secondary market is minimal. The largest categories of tokens are US Treasuries, commodities and money market instruments throughout the period. These assets are already liquid, already have a well-established investor base and have been already traded in the traditional markets. Hence, whilst tokenisation offers increased accessibility, efficiency in settlement and distribution remain the main drivers of market activity. The RWA space is growing and seems to be best suited for assets that draw in capital and participation. Strong markets create liquidity and tokenisation simply improves how that liquidity is accessed, transferred and utilised.
Why tokenisation does not make illiquid assets liquid
The programs under tokenisation focus on assets that have been traditionally illiquid. These include real estate, private credit, private equity and collectibles. Whilst tokenisation simplifies access and makes it more fluid, it does not necessarily address the drivers behind market participation. A property used for commercial purposes can be split into thousands of digital tokens - for example, making it easier to share that property. But liquidity is determined by the willingness to purchase and sell those tokens by investors; with little demand, secondary market activity will likely be limited, regardless of the efficiency of transfer of ownership. For niche assets, it is the same deal. Specialised investments, private ownership interests and rare collectibles have limited audiences. More access can lead to more reach, but not necessarily more participation. Despite the advancements in technology and increased accessibility to on-chain tools, tokenisation still struggles with market-based structural challenges. Price discovery marks one of the constraints. Valuation becomes very difficult if trading is limited, as there are fewer transactions to compare prices. Thin markets also lead to volatility, as relatively small trades can cause significant fluctuations in token prices. Therefore, tokenisation improves the efficiency of ownership transfers, but it does not necessarily lead to accurate pricing or to greater liquidity.
Regulatory challenges complicate market development as well. So tokenisation can facilitate issuance and transfer, but the actual assets remain subject to the legal rules of each jurisdiction. These rules govern who is allowed to purchase, own and trade certain instruments which, in turn, can directly impact on market participation. However, even though the infrastructure supports trade, lack of clarity or inconsistent regulation make it difficult for the secondary market to thrive. Liquidity fragmentation yet another inefficiency. Because tokenised assets are typically traded across multiple blockchains, exchanges and custodial platforms, the trading activity is fragmented across different venues. Rather than centralised pools of liquidity, activity becomes fragmented with markets getting thinner, price slippage increasing and more inefficient market execution. This fragmentation limits the extent to which tokenisation can replicate the liquidity characteristics of traditional centralised financial markets. Liquidity also relies on trust and adoption. Investors have to trust the token issuer, the trading platform and the enforceability of ownership rights. This is especially relevant for institutional investors who need clear regulations and a well-developed market infrastructure prior to investing. Even if designed to perfection, the tokenised markets may find it hard to attract continuous participation without this layer of trust. Ultimately, the discussion about why tokenisation cannot magically fix illiquid assets centres on market structure. With the introduction of blockchain technology, settlement, transparency and the transfer of ownership are enhanced. However, demand, legal clarity, market makers and trading activity remains the foundation for sustainable liquidity. Without these foundations, tokenisation can enhance efficiency but cannot convert illiquid assets to liquid.
The tokenisation industry may be asking the wrong question. The challenge is not how to put more assets on-chain, but how to create deeper, more active markets around them. Blockchain can make ownership transferable in seconds but it cannot manufacture demand, trust or price discovery. The greatest commercial opportunities may therefore lie not in tokenising illiquid assets but in building the infrastructure that attracts liquidity: regulated marketplaces, market makers, digital identity, custody, compliance and distribution networks. The winners of the next phase of tokenisation may not be those issuing the most tokens but those creating the ecosystems where capital, confidence and liquidity naturally converge. In finance, technology can improve the pipes, but only markets can create the flow.
This article first appeared in Digital Bytes (23rd of June, 2026), a weekly newsletter by Jonny Fry of Team Blockchain.