Tokenized RWAs: Where Institutional Demand Actually Starts

The promise of tokenized real world assets has been the talk of every crypto conference for years. Faster settlement. Greater efficiency. New distribution channels. But how much of that promise has actually translated into institutional demand, and how much is still panels talking about panels?

At the recent Digital Assets Forum, Falcon Finance’s Chief RWA Officer Artem Tolkachev joined a panel spanning custody, market structure, infrastructure, and asset management to pressure-test that question. The session was moderated by Anne-Sophie Kappel (DEA), with Patrick Hennes (DZ Privatbank), Mykolas Majauskas (ByBit), Michael Manning (Ava Labs), and Roger Bayston (Franklin Templeton).

The conversation went off-script almost immediately. Here’s what we learned.

Demand Is Real, But It’s Concentrated

The panel landed on an uncomfortable truth fast: the loudest demand for tokenized RWAs today is coming from crypto-native institutions, not traditional finance.

Crypto funds want yield-bearing instruments like tokenized money market funds because they can improve the economics of onchain trading and collateral, compared with holding non-yielding stablecoins. Roger Bayston pointed to Franklin Templeton’s Benji (FOBXX) as a live example of demand for tokenized money funds, especially when the product can move with stablecoin-like utility and still accrue yield in short holding windows.

From the TradFi side, the picture is different. Artem’s point was simple: for firms that already operate under clear rules and already have efficient access to treasuries and money market funds, tokenization has to deliver a measurable advantage to justify added complexity. Otherwise, it reads like extra steps and extra basis points, without removing enough friction.

That isn’t pessimism. It’s precision.

Tokenization Works Best When It Solves a Specific Pain

One of the sharpest breakdowns came from Michael Manning’s framing of what tokenization actually does well. Strip away the narrative, and tokenization is most compelling when it:

• Reduces counterparty risk (for example via better transparency or delivery-versus-payment settlement)
• Speeds up settlement and transferability
• Lowers operating cost through automation of lifecycle events
• Improves collateral mobility by making assets easier to move and reuse across venues

The important nuance is that these benefits do not apply equally to every asset class.

Some assets already trade in deep, efficient markets with mature rails. In those cases, tokenization needs a very clear “why now” beyond novelty. The panel’s push was to be more selective, focus on where tokenization’s advantages are native and obvious, rather than trying to wrap everything for distribution alone.

In plain terms: stop chasing tokenization because it sounds futuristic. Chase it where it makes the product materially better for the user.

Stablecoins Are Necessary, But Not Sufficient

The panel kept circling back to stablecoins as a settlement layer. Without reliable payment rails, tokenized money market funds and other tokenized products lose a lot of their point.

But the conversation also pushed past the easy version of that story.

Mykolas Majauskas argued that stablecoins, at current scale, are not yet positioned to support settlement for markets orders of magnitude larger, and that true global-scale settlement ultimately pulls governments into the picture. Money is a geopolitical tool, not just a technology choice.

At the same time, the panel raised a more nuanced counterpoint: stablecoin velocity may matter as much as stablecoin supply. If stablecoins are used as high-speed payment instruments that cycle quickly in and out of yield-bearing instruments, the total amount required to support meaningful activity may be lower than headline comparisons imply.

The takeaway: stablecoins are a critical primitive, but they are not the whole stack. Settlement rails need to connect cleanly to yield-bearing instruments and custody infrastructure, or institutional usage stays limited.

Retail Is Still the Most Underserved Category

Artem made a point that deserves more attention: retail is often treated as an afterthought in the RWA conversation, even though retail wallets are already the largest distribution footprint in the market.

Many tokenized real world assets still sit behind whitelists, gates, and jurisdictional restrictions. Even when products are strong, onboarding and access are not frictionless, and that limits adoption.

This is a distribution problem disguised as a product problem. Hundreds of millions of wallets exist on major platforms, but connecting those wallets to regulated tokenized securities in a way that is both compliant and scalable remains a work in progress.

Europe Is Playing in the Sandbox While the US Heads for the Beach

The regulatory contrast between Europe and the US came up repeatedly.

Europe moved early with frameworks like MiCA, but the panel criticized the pace and constraints of pilot regimes: capped scope, capped volume, and time-bounded experimentation. Mykolas captured the mood with a line that stuck: “The US is going straight for the beach while we’re playing in the sandbox.”

The deeper point was not that regulation is “good” or “bad.” It is that clarity and proportionality matter. Institutional demand does not thrive on vague rules or short-term sandboxes. It grows when the rules are legible enough for compliance teams to approve and for businesses to invest in real deployment.

Privacy Is the Sleeper Issue

Michael Manning raised a topic the industry tends to postpone: privacy.

Early institutional experiments favored permissioned environments because regulated institutions need control. But markets are networks, and permissioned systems struggle with connectivity, liquidity, and developer ecosystems. That is part of why attention is shifting back toward permissionless rails.

The trade-off is that permissionless environments reintroduce a hard question: how do institutions transact at scale without broadcasting sensitive positions and flows to the world?

If tokenized markets grow meaningfully, privacy becomes less of a “nice-to-have” and more of a gating factor. The panel referenced emerging approaches like zero-knowledge systems and advanced encryption, but the consensus was clear: this is not solved yet, and it will shape what can scale.

Digital Identity Comes Before Digital Assets

Patrick Hennes delivered one of the most grounded points of the entire panel: there is no point tokenizing assets if investors still need to fill out 30-page application forms at the start of the value chain.

A portable, verifiable identity layer, the ability to share KYC and permissions safely across institutions, is prerequisite infrastructure for compliant tokenized markets. Today, asset managers generally cannot rely on another institution’s KYC process, which keeps onboarding fragmented and slow.

The “Web3 wallet” vision becomes much more real when it includes identity, not just assets.

Where Falcon Finance Stands

This panel reinforced something we already believe: tokenized RWAs are not a single market. They are a set of primitives. Adoption happens when those primitives translate into outcomes that users can feel: faster settlement, better collateral utility, lower operational burden, and access that actually works.

The opportunity is not in slapping a token on every existing product.

The opportunity is building the infrastructure that makes tokenized assets genuinely better: cheaper to run, faster to settle, easier to use as collateral, and more transparent where it matters.

That is what we focus on at Falcon Finance, building collateral infrastructure and yield-bearing instruments designed for onchain markets, with an eye toward the rails institutions need to participate at scale.