Tokenization Has a Wall Street Story. It Still Needs a Main Street One.

Today’s (March 25) House Financial Services Committee hearing on “Tokenization and the Future of Securities” reflects how far the conversation about digital assets, securities law and institutional custody frameworks has traveled in a remarkably short time. The committee memorandum indicates that lawmakers are examining regulatory gaps, investor protection, market integrity and capital formation, a scope that would have been difficult to imagine in a congressional setting only a few years ago. The Securities Industry and Financial Markets Association (SIFMA) puts tokenized real-world assets above $26 billion globally, including more than $11 billion in tokenized Treasury debt. Those numbers are growing quickly, and Washington is paying attention. 

But scale and institutional momentum do not automatically translate into value for the people this technology is supposed to serve. The more important question is whether tokenization delivers something better for ordinary investors, or whether it remains a back-office upgrade dressed in the language of democratization. 

An infrastructure case is not enough

The industry case for tokenization is by now familiar. The Depository Trust and Clearing Corporation (DTCC) points to streamlined post-trade infrastructure and asset mobility. Nasdaq presents tokenization as part of a broader push toward continuous market operations and more automated securities workflows. BlackRock’s BUIDL fund, Franklin Templeton’s on-chain money market fund and a growing roster of institutional entrants have demonstrated that the pipes can be built and that serious capital will flow through them. These are real improvements, but they are mostly invisible to end users.

Settlement that clears in minutes rather than days is a genuine operational advance. Programmable compliance and automated corporate actions reduce friction for institutions managing large portfolios. Interoperability between platforms, if it arrives, could unlock liquidity in asset classes that have been historically difficult to trade. The infrastructure argument is not wrong. It’s simply insufficient as a consumer proposition. 

The question that matters to retail investors is more direct. Does tokenization make investing easier to understand, easier to access and meaningfully better than the products they can already use today? If the answer is no—if tokenized securities feel like a slower, more confusing version of buying an ETF through a brokerage app—the technology will struggle to find a mainstream audience regardless of what it does to settlement timelines. 

I’ve argued before that the first 60 seconds still decide whether a user stays or leaves a financial product. The same rule applies here with particular force. Faster settlement will not rescue a product that opens with confusing onboarding, dense disclosures or custody arrangements that feel remote and fragile. The infrastructure can be elegant, but if the experience is not, it doesn’t matter. 

Access has to be visible to the user

If tokenized investing ends up much like buying securities through a standard retail app, the novelty will remain buried in the plumbing, and the market will reflect that. Retail users already have access to stocks, ETFs and fractional shares through interfaces that have been refined over years of competitive pressure, so tokenization has to widen access in a way users can actually feel. Robinhood, Fidelity, Schwab and others have already lowered the barrier to entry for mainstream securities investing to a considerable degree. Tokenization has to widen access in a way users can actually feel, not just in a way that analysts can diagram. 

The real opportunity lies in the asset classes and markets that those platforms have not reached. Private credit, real estate, infrastructure debt and pre-IPO equity are categories where retail participation has historically been limited by minimum investment thresholds, accreditation requirements and illiquidity. Tokenization’s strongest consumer case is opening doors to assets that have been harder to reach, then packaging that access in products that ordinary people can navigate without a financial glossary or a lawyer. 

This requires both the underlying technology and clear regulatory pathways, intuitive interfaces and the kind of trust that only comes from a track record and familiarity. I have made a similar point about adoption following familiar behavior, payment methods and recognizable flows in other contexts. Tokenized investing will face the same test, and it will fail if the product feels like a specialist tool built for insiders who already understand what they’re buying.

Ownership has to travel, trust has to hold

Portability of ownership is another key test. If tokenized assets cannot move between users across regulated, authorized environments—with clear custody, transfer protocols and legal enforceability—their promise stays theoretical. Ownership that cannot be exercised or transferred is not meaningfully different from ownership that does not exist. Even DTCC’s testimony frames the core opportunity in terms of interoperability, asset mobility and liquidity. The vision only works if the pipes connect.

This is why law and custody matter more than elegant technology. The most sophisticated on-chain infrastructure in the world is worth little to an ordinary investor who cannot answer the question: if something goes wrong, what do I actually own and who is responsible for it? That has not always been easy to answer in the tokenized asset space, and until it is, institutional adoption will outpace retail adoption by a considerable margin. 

Nasdaq’s testimony calls for clear statutory definitions and jurisdictional boundaries. I’m inclined to make the same argument. Markets grow when the rules are legible enough for both institutions and ordinary users to trust what they are buying. Ambiguity benefits sophisticated participants who can afford to navigate it. It disadvantages everyone else. 

The regulatory scaffolding being discussed in today’s hearing—custody standards, transfer agent definitions, broker-dealer treatment of digital assets—is the foundation on which retail participation either gets built or doesn’t.

Congress should evaluate tokenization by a tougher standard than settlement speed or institutional efficiency. Both matter, but neither is sufficient. If tokenization delivers broader access to asset classes that were previously out of reach, ownership that carries real legal weight and flexibility and a user experience that feels genuinely better than what already exists, this market will grow quickly and the public interest case will be clear. If it delivers faster plumbing for institutions while leaving the retail investors with a slightly more complex version of what they already had, tokenization may prove to be one of the more consequential missed opportunities in the recent history of financial technology, and one that leaves the public wondering what changed at all.