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"Tokenization" gets thrown around as if it's one thing. It isn't. A tokenized Treasury bill, a tokenized apartment building, and a tokenized share of a private fund are all "on-chain," but they run through different legal structures, carry different risks, and sit at wildly different stages of maturity. A token is a digital record of a claim on a real-world asset — the same way a stock certificate was never the company itself, just proof of a claim on it. Tokenization doesn't change what's being owned; it changes how the record of ownership is created, updated, and moved.
Property records are held by county clerks. Mortgages have due-on-sale clauses. Transfer taxes trigger on a change in legal ownership. So almost every real-world tokenization project uses a Special Purpose Vehicle (SPV) — typically a Delaware or Wyoming LLC — which holds legal title to the actual asset. The tokens represent membership interests in that LLC, not the asset directly.
Once the legal wrapper exists, developers write contracts that define who can hold the token (many require KYC/whitelisting), how income gets distributed, what happens on a transfer, and what rights the token carries — voting, dividends, redemption.
Digital tokens are generated on-chain, each representing a fractional claim — a specific dollar amount, percentage, or share class, depending on the structure.
Because tokens trade on-chain, settlement happens in minutes and is recorded transparently, with no clearinghouse in the middle. Traditional clearing is faster than it used to be — US securities moved from T+2 to T+1 in May 2024, so a stock trade now settles the next business day — but that is still a day of counterparty risk and reconciliation that an on-chain transfer does not have.
Size depends on which number you are quoting, which is itself part of the problem. Excluding stablecoins — a separate category worth roughly $300 billion — rwa.xyz put the value of tokens actually issued and tradable on-chain at about $32 billion in May 2026, while its narrower assets-under-management measure sat closer to $22 billion, and a third figure counting assets merely committed to tokenization runs into the hundreds of billions. On the tradable measure, tokenized Treasuries lead at roughly $10 billion, with private credit close behind at about $8 billion; tokenized equities, despite the attention they get, are under $1 billion. BlackRock's BUIDL fund was the first tokenized fund from a major Wall Street institution to cross $1 billion, and holds roughly a quarter of the tokenized Treasury market. Franklin Templeton's BENJI, Ondo Finance, Apollo, WisdomTree, and Hamilton Lane are all running tokenized products at meaningful scale.
Treasuries are the easy case — already simple, fungible, government-backed instruments. Real estate is harder, because it is illiquid, locally regulated, and physically maintained, none of which a blockchain touches. Platforms like Lofty ($50 minimums, daily rental-income distributions) show the model working at small scale. But RealT, one of the earlier and larger platforms, suspended rent distributions in February 2026 as its Detroit portfolio deteriorated. Detroit then filed its largest-ever nuisance-abatement lawsuit that July, covering more than 400 properties, and a court barred RealT from collecting rent or evicting tenants on 408 of them until they were brought up to code. RealT announced the voluntary liquidation of its US structures the same month.
Good at: lower minimum investment size, faster and cheaper settlement than traditional clearing, transparent ownership records. Doesn't solve: the underlying asset's own risk, regulatory classification (these are securities, and regulated as such), institutional custody standards, or real secondary-market liquidity, which needs actual trading volume to show up rather than just the technical capability for 24/7 trading to exist. Tax treatment is a sharper example than it first looks. Because Section 1031 explicitly excludes partnership interests, the LLC membership interests most of these deals use generally cannot be rolled into a like-kind exchange at all — that part is settled, not open. Delaware Statutory Trusts are the established structure that can qualify, provided the trust holds real estate and investors stay passive. What no IRS guidance addresses is whether wrapping either one in a token changes the answer.
Tokenization is a faster, cheaper, more fractional way to record and move ownership of assets that already exist — not blockchain replacing finance itself. It's narrower than that, and more useful: the same institutions (BlackRock, Franklin Templeton, Apollo) that run the existing system are adopting it, while the hardest cases — real estate chief among them — expose exactly where the technology's reach ends and the old-fashioned work of managing a physical asset begins.
Explain, in your own words, why a tokenized apartment building token and a literal deed to that building are not the same thing — and what specifically went wrong at RealT that no amount of blockchain infrastructure could have prevented.
Reading a good explanation feels like understanding it. Usually it isn't the same thing — and you don't find out which one you've got until someone asks you to explain it back.