Institutional adoption of tokenized assets is hindered by unprepared legacy systems and operational challenges, warns a former 21Shares executive.
Tokenization promises faster settlement and asset movement but lacks integration with existing financial infrastructure, according to a former 21Shares co-founder. While blockchain firms have improved transaction throughput, critical gaps remain in compliance, risk management, and record-keeping systems used by banks and asset managers.
Legacy systems, including books and records software and third-party providers, have not adapted to blockchain-native transactions. Financial institutions also face challenges in adjusting risk frameworks for 24/7 trading and regulatory reporting of tokenized assets.
The industry’s primary obstacle is scaling tokenization beyond limited pilots, not its technical functionality. Without addressing operational and systemic hurdles, widespread adoption may stall despite its potential benefits.