In 2024, experiments in fixed income and other capital markets tokenization efforts demonstrated that the current technology can likely handle significant volumes without performance issues. Fixed income and various types of funds appear poised as leading candidates for scaling tokenization efforts. While asking “what’s the benefit?” should be driving tokenization decisions, there is definitely a fever to be a first mover to take market share so I think that will be less of a factor in the next couple of years. As we move into 2025, several other factors will determine whether tokenization reaches its potential for widespread adoption and institutional scale. Here are the key areas to watch:

Interoperability

Interoperability is essential for meaningful traction in 2025. It is the cornerstone for building the trust that organizations need for institutional adoption. Without interoperability, fragmentation will persist, hindering the widespread adoption required to drive real volume. Efforts to establish seamless communication and compatibility across networks must be prioritized to overcome this challenge.

AI-Native Efforts

New organizations entering the tokenization space have an advantage over legacy firms because they can integrate AI from the ground up rather than retrofitting it into existing processes. AI can play a pivotal role in:

• Scaling and automating processes.
• Enhancing risk management.
• Enabling real-time monitoring.

These advancements can improve transaction security and trust, which are crucial for achieving scalability. In 2025, it will be vital to monitor how emerging companies leverage AI to build efficient ecosystems that address these needs.

Governance

Governance is crucial for achieving institutional scale. While lenient regulations are likely, institutions will require strong governance frameworks to build trust. This is particularly important for companies focused on interoperability that want to be the main entry point for tokenization networks. I’m not real optimistic that we will make regulatory progress so we may need the industry to work together to establish some of these practices. Establishing an adult in the room might create a foundation for regulation further on.

Collaboration and Market Dynamics

In 2025, institutions are likely to form alliances to capture larger market shares and build client trust. Early conferences and webinars will provide insights into whether meaningful cross-network collaborations will emerge. The development of a clear frontrunner in interoperability—particularly one that successfully spans multiple asset classes—could make 2025 a pivotal year for accelerating tokenization adoption. Conversely, without such developments, the technology’s potential for scale may remain unrealized.