Tokenization Fails to Create Instant Liquidity for Illiquid Assets

Tokenization, a key concept in blockchain and cryptocurrency, has been touted as a way to improve access and liquidity for assets. However, industry leaders at Paris Blockchain Week are pushing back against the idea that putting an asset onchain will magically create buyers, sellers, or functioning secondary markets.

The tokenized real-world asset market has grown rapidly, increasing from $8.8 billion to approximately $29.9 billion in one year. However, this growth is largely driven by easier-to-standardize and trade instruments such as US Treasury debt and commodities.

Speakers emphasized that tokenization may change packaging and access without transforming the underlying trading reality. In other words, illiquid assets do not become liquid merely because they are digitized.