50K views
By Sandy Kaul - Head of Innovation, Franklin Templeton
Interest in using programmable tokens as the Next Gen wrapper for investible assets is gathering steam as regulations become clearer and as trust and comfort in the underlying crypto technologies gain ground. Assets being targeted for such tokenization include stocks, bonds, funds, ETFs, commodities, private equity, private credit, real estate and other types of private funds. Broadly, many in the industry refer to these as “real world assets” or RWAs. This is to help differentiate these types of tokenized investments from natively tokenized cryptocurrencies or alt coins that provide exposure to projects and protocols originating from the crypto ecosystem.
Estimates released in early 2026 show that RWA tokenization is exploding—growing an estimated 5x since 2023 and 3x between 2025 and 2026 alone. (1) From an estimated value of $5 billion in 2023, estimates now put on-chain value at more than $25 billion with private credit, treasury products and real estate accounting for the bulk of those holdings. (2) Such explosive growth is actually seen accelerating. Forecasts put the total assets in tokenized RWAs as high as $4.0-$16 trillion by 2030, with some citing figures as high as $30 trillion by 2033. (3)
Regardless of the actual figure, the number of announcements from key industry participants about their tokenization plans certainly seem to support sharply higher forecasts.
Tokenization of real-world assets is not new. Franklin Templeton launched the first tokenized money market fund in April 2021, and this product has been running 24/7/365 since that time with total AUM of nearly $1.5 billion across our Benji Technology Platform.
Attention shifted, however, when tokenization moved from government bonds and money market funds into stocks. Early entrants into tokenized stock trading helped to ignite interest and accelerate the pace of RWA tokenization.
Robinhood kicked the race off, announcing in June 2025 that they would offer more than 200 tokenized US stocks to customers in the European Union. Robinhood CEO Vlad Tenev noted that “tokenization is like a freight train. It can’t be stopped, and eventually it’s going to eat the entire financial system.” (4)
Kraken, a cryptocurrency exchange, soon followed, launching xStocks in June 2025 on the Ethereum and Solana blockchains for investors outside the US, UK or other restricted jurisdictions. In the following nine months, the xStocks program recorded $3.6 billion in on-chain transaction volume and about $25 billion in total trading volume across exchanges, with about $225 million in tokenized assets held across ~80,000 blockchain wallets. (5)
Ondo Global Markets came out with 200+ tokenized stocks in September 2025 and had surpassed $500 million in total value and more than $7 billion in cumulative trade value during the platform’s first six months of activity. This augments the $2.0+ billion that Ondo Finance holds in total value locked for its tokenized US treasury products. (6)
While these actions from emerging and retail-focused participants garnered attention and interest, it was a subsequent set of announcements from top institutional providers that signaled to the industry that a new era is dawning for how we trade and manage regulated securities. Indeed, such announcements herald the most significant changes in how securities will operate since book order entry was introduced in the early 1970s.
The Depository Trust Clearing Corporation (DTCC) received a No-Action letter from the Securities Exchange Commission (SEC) in December 2025 paving the way for them to offer DTC-custodied tokenized real-world assets beginning in H2 2026. (7)
The New York Stock Exchange announced the development of a platform for the trading and on-chain settlement of tokenized securities, including 24/7 operations, instant settlement, orders sized in dollar amounts, and stablecoin-based funding. (8)
NASDAQ announced a partnership with the parent company of crypto exchange Kraken that will feature the launch of a specialty equity token design for public companies that allow issuers to enable programmable investor engagement and automated corporate actions such as proxy voting and dividend payments. These innovations are expected to go live by early 2027. (9)
Excitement about tokenization is building, but there is a lot to unpack to fully understand how tokenization may impact the financial services industry. There are three types of tokenized products that are all likely to come to market in the coming months:
Digitally Native Tokenized Products: These tokens provide direct exposure to the underlying assets whether a stock, a bond, a commodity or a fund. The token entitles the holder to the full ownership rights and protections associated with the assets embedded in the token. Ownership is recorded on a single, on-chain ledger. No off-chain record of ownership exists. Settlement of these products is done atomically with payments and assets changing hands immediately upon a transaction being verified. Franklin Templeton’s tokenized money market fund is an example of this type of tokenized offering.
Synthetic Exposure Tokens: These are also digitally native offerings, but rather than the token providing direct exposure to the underlying asset, the token operates more like a swap, providing pass-through of the economic outcomes generated by the underlying asset. Token holders do not possess ownership rights, nor investor protections linked to the underlying assets. Instead, the token holder owns shares of a special purpose vehicle (SPV) that houses the underlying assets. These can also be seen as “wrapped” or “backed” investments. Ownership of the tokens is tracked via a single, on-chain ledger. And like digitally native products, payments and tokens are exchanged immediately when a transaction is verified. The tokenized stocks being offered by Robinhood, Kraken and Ondo are examples of this type of tokenized offering.
Digital Twin Tokens: These tokens do not provide direct exposure to the reference asset. Instead, ownership of the asset is awarded and recorded in traditional, off-chain form (e.g., shares of LP interests) and the token functions as a “receipt” showing that the token holder owns the off-chain asset. These offerings require two ledgers. The actual ownership record is tracked in off-chain, legacy systems that typically require an overnight batch process to update. Tokens are tracked in a separate ledger held onchain. Tokens are minted when a position is established and/or verified in the off-chain ledger. As such, these transactions are subject to traditional T+1 or more settlement and NAV cycles to update. Tokens are burned and cease to exist when the positions are exited. The planned issuances from the DTCC, NYSE, and NASDAQ are examples of this type of tokenized offering.
Each of these tokenization models require that the transfer agent who verifies these transactions and maintains the ownership record undertake a new type of compliance process called Know Your Token (KYT). This process examines the blockchain wallet addresses that are looking to purchase or sell tokens and tracks what wallets the token has transited through in its recent activity. This review is aided by the blockchains themselves that typically white label wallets, indicating that the wallet is not showing up on any restricted list and that the wallet holder has provided sufficient information to verify their eligibility to send and receive that type of transaction.
Beyond this KYT check, synthetic exposure tokens do not require any additional verification of the wallet holder. For this reason, these are deemed to be “permissionless” tokens. If the smart contract terms dictate that only investors outside the US can own this token, and the wallet is verified via the KYT process as being held by an owner outside the US, the transaction can go through.
Digitally native products that provide direct exposure and digital twins are by contrast considered “permissioned” tokens. Simply knowing about the wallet is insufficient. These token holders must be verified by a full Know Your Customer / Anti-Money Laundering screening (KYC/AML).
Understanding how the token provides exposure to the real-world assets and whether the token is deemed permissioned or permissionless is critical in determining what use cases the token can support.
Synthetic exposure tokens offer the most utility in the crypto ecosystem, but the least protection in terms of investor rights. These tokens can move from any wallet to any other wallet that meets the KYT criteria. As such, they can be readily transferred between wallet owners and can be posted into decentralized financial protocols (DeFi) as assets or collateral. This allows token holders to find liquidity 24/7/365 for their tokens and to potentially earn additional fees, spreads, or yield. However, token holders cannot vote on any issues affecting the underlying real word asset and economics generated by the underlying assets (e.g., yield, dividends) are awarded on a pass-through nor direct basis to the token holder, thus making them fully reliant on the token issuer. As such, in most instances, the token holder would not have any claim on the issuer of the underlying asset.
Digitally native RWA tokens offer the next highest level of utility in the crypto ecosystem but are more restricted in their use. These tokens can move from wallet to wallet, but because they are permissioned, they can only move across wallets that have gone through both KYT and KYC/AML verifications. Token holders are the official owners of the RWA and as such, they get the full ownership rights including voting rights on their holdings and the direct award of economic benefits. Unlike synthetic exposure tokens, it is difficult to use these tokens in DeFi since tokens pledged to DeFi protocols are co-mingled into a single pool rather than being held by a specific wallet address.
Where digitally native RWA tokens are proving highly effective, however, is for use as collateral for financing arrangements and derivative transactions. Token holders benefit from enhanced on-chain liquidity and instant settlement. Moreover, since the official ownership record is on-chain and the shareholder record is being compiled second-by-second, token holders get benefits that are not possible to provide in the digital twin model. For example, Franklin Templeton’s tokenized money market fund starts paying interest to the token holder the moment the position is established and pays out yield daily via incremental new token issuance directly into an investor’s wallet. This is not possible with tokens issued via the digital twin model.
Indeed, digital twin RWA tokens offer the least utility of the current models. These tokens are tied to an off-chain ownership record, and the administration of rights and benefits is thus performed by legacy systems. Distributions are made via fiat currency (not incremental new token issuance) into traditional investment accounts (not wallets) on current payment schedules (e.g., yields paid at the end of a month for a money market fund). Tokens are receipts linked to specific shares or interests held in off-chain ledgers and as such they cannot be transferred between wallets. Tokens are minted when an investor subscribes and are burned when that investor redeems.
Even digital twin RWA tokens, however, should enable increased transparency into investor holdings since the token records the holder’s receipt of ownership and sits directly in the investor’s wallet rather than in a book-keeping entry in a database held by an intermediary. Moreover, having these assets in tokenized form should facilitate 24/7/365 trading and allow for real-time updates to the token records even if the official off-chain ownership records lag in recording such activity.
Each type of RWA tokenization model offers benefits and new types of utility over today’s approach that has dominated securities and fund processing for the past 50 years. All the approaches leverage the latest blockchain technologies and tokens themselves can operate as “smart” wrappers that can allow for many operational processes to be embedded into the token itself and automatically executed. Each model provides increased transparency into an investor’s holdings, thus making it easier to utilize assets for collateral. Some of the models are even enabling new types of utility that can result in more accrual of benefits or new earnings opportunities.
Most importantly, by tokenizing RWAs, the entire financial industry—from those that have previously been seen as crypto natives to traditional financial players—will now be looking to converge on common infrastructure. Wallets are likely to become the key financial interface for individuals and institutions and today’s surge in RWA tokenization is the bridge to help drive that change.
Sources
Coindesk, "RWA Tokenization Market Has Grown Almost Fivefold to $24B in 3 Years" 6/26/2025
Brikken, "Real World Asset Tokenization in 2025: Market Leaders, Asset Trends, and What Comes Next, 2025
Ibid
CNBC, "Tokenization of assets is freight train coming to markets: Robinhood CEO" 10/2/2025
Trading View News, "Kraken launches xChange engine to power tokenized stock trading"
Ondo Finance, "Ondo Becomes the Largest Provider of Both Tokenized Treasuries & Stocks, Surpassing $2.5 Billion in Total Value Locked"
DTTC, "Paving the Way to Tokenized DTC-Custodied Assets"
Intercontinental Exchange, "The New York Stock Exchange Develops Tokenized Securities Platform"
Nasdaq, "Nasdaq to launch equity token design, putting issuers at the center of tokenization"
** What are the risks?**
All investments involve risks, including possible loss of principal.
Blockchain and cryptocurrency investments are subject to various risks, including inability to develop digital asset applications or to capitalize on those applications, theft, loss, or destruction of cryptographic keys, the possibility that digital asset technologies may never be fully implemented, cybersecurity risk, conflicting intellectual property claims, and inconsistent and changing regulations. Speculative trading in bitcoins and other forms of cryptocurrencies, many of which have exhibited extreme price volatility, carries significant risk; an investor can lose the entire amount of their investment. Blockchain technology is a new and relatively untested technology and may never be implemented to a scale that provides identifiable benefits. If a cryptocurrency is deemed a security, it may be deemed to violate federal securities laws. There may be a limited or no secondary market for cryptocurrencies.
Stablecoins represent a new and rapidly evolving technological development which may be subject to regulatory uncertainty, competitive pressures, security risk, limited performance history and potential volatility. There may be risks associated with the issuance, redemption, transfer, custody, and record keeping of tokens maintained and recorded primarily on a blockchain.
***Digital assets **are subject to risks relating to immature and rapidly developing technology, security vulnerabilities of this technology, (such as theft, loss, or destruction of cryptographic keys), conflicting intellectual property claims, credit risk of digital asset exchanges, regulatory uncertainty, high volatility in their value/price, unclear acceptance by users and global marketplaces, and manipulation or fraud. Portfolio managers, service providers to the portfolios and other market participants increasingly depend on complex information technology and communications systems to conduct business functions. These systems are subject to a number of different threats or risks that could adversely affect the portfolio and their investors, despite the efforts of the portfolio managers and service providers to adopt technologies, processes and practices intended to mitigate these risks and protect the security of their computer systems, software, networks and other technology assets, as well as the confidentiality, integrity and availability of information belonging to the portfolios and their investors.
Important legal information*
Discussions may be theoretical in nature and concepts discussed may not come to pass. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.
Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.
Brazil: Issued by Franklin Templeton Brasil Ltda. Canada: Issued by Franklin Templeton Investments Corp. Offshore Americas: In the United States, this publication is made available by Franklin Templeton. United States: Issued by Franklin Templeton. Investments are not FDIC insured; may lose value; and are not bank guaranteed. Europe: Issued by Franklin Templeton International Services S.à r.l., 8A, rue Albert Borschette, L*[1]*1246 Luxembourg. Poland: Issued by Templeton Asset Management (Poland) TFI S.A.; Rondo ONZ 1; 00-124 Warsaw. Saudi Arabia: Issued by Franklin Templeton Financial Company, 13512 Riyadh, Saudi Arabia. Regulated by CMA. License no. 23265-22. South Africa: Issued by Franklin Templeton Investments SA (PTY) Limited, which is authorised by the FSCA as a Financial Service Provider (No.44475). Switzerland: Issued by Franklin Templeton Switzerland Ltd, Talstrasse 41, CH-8001 Zurich. Middle East & Africa (ex South Africa): Issued by Franklin Templeton Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority. Address: Franklin Templeton, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box 506613, Dubai, U.A.E. Tel: +971(04) 428 4100. United Kingdom: Issued by Franklin Templeton Investment Management Limited (FTIML), registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL. Australia: Issued by Franklin Templeton Australia Limited (ABN 76 004 835 849) (Australian Financial Services License Holder No. 240827), Level 47, 120 Collins Street, Melbourne, Victoria 3000. Hong Kong: Issued by Franklin Templeton Investments (Asia) Limited. Japan: Issued by Franklin Templeton Japan Co., Ltd. South Korea: Issued by Franklin Templeton Investment Advisors Korea Co., Ltd. Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd. Singapore: Issued by Templeton Asset Management Ltd. (UEN) 199205211E
Copyright © 2026 Franklin Templeton. All rights reserved.
Reactions and replies to this article.
InvestorX
@investorie
This is the part most people still don’t understand. Tokenization isn’t about putting assets “on-chain.” It’s about rebuilding how value moves. Stocks, bonds, funds, real estate, all becoming programmable tokens with 24/7 markets and instant settlement. That kills: • T+1 delays • capital locked in intermediaries • fragmented liquidity But here’s the real question: What moves value BETWEEN all these tokenized assets and systems? Because tokenization solves ownership, not liquidity. That’s where a neutral bridge matters. If trillions in RWAs go on-chain, you don’t want siloed liquidity pools, you need a fast, scalable settlement layer. That’s the piece still being decided. And that’s exactly where XRP fits. Not as a hype asset, but as infrastructure.
SAGINT Inc
@sagintinc
Franklin Templeton (@FTDA_US) just published the clearest public taxonomy I’ve seen for RWA tokenization. Three distinct models, materially different rights, materially different utility. One thing worth adding: the legal architecture underneath the token matters as much as the token itself. Under UCC Article 12, a tokenized asset that qualifies as a Controllable Electronic Record (CER) carries legal enforceability independent of any intermediary. Control of the CER is control of the asset. Not a receipt, not a synthetic pass-through, not a custodian’s representation. That’s the gap between a token that represents an asset and a token that is the asset, legally and commercially. As RWA tokenization goes institutional, the question won’t be whether to tokenize. It’ll be which legal framework governs the token you’re holding.
Bron Wallet
@bronwallet
@FTDA_US The key question isn’t whether RWAs will grow, but which tokenization model wins. Synthetic tokens are far more composable in DeFi, while permissioned models protect investor rights but limit liquidity. The real battleground is composability vs compliance.
OneAsset
@oneasset_io
@FTDA_US Great breakdown. All 3 tokenization models give you very different rights as an investor. Knowing which one you’re buying matters more than the $25B headline.
iExec RLC
@iex_ec
@FTDA_US RWA Tokenization will grow much faster when programmable privacy is included. Keep that sensitive data confidential, the industry giants will come
Ari | Theo
@aripingle
@FTDA_US Great stuff, Sandy nailed it. Theo was founded on the notion that digitally native tokens only matter if there are real markets behind them with deep liquidity, instant settlement, full composability https://t.co/6LpAAOaQOz
RWA.xyz • 21K views
Wintermute Ventures • 101K views
Maria 🐸 • 323K views
Silvio • 62K views
Chris Dixon • 1.1M views