Viewpoint by: Kevin de Patoul, Founder and CEO of Keyrock
A sense of déjà vu permeates the cryptocurrency space at the moment. We’ve been discussing topics like real-world assets (RWAs), tokenized funds, and on-chain treasuries for years. Back in 2022, when excitement far surpassed actual application, a BCG study forecasted that tokenized assets could reach a total valuation of $16 trillion by the year 2030. In 2025, the current market capitalization hovers around $50 billion.
This time, the situation feels subtly different, and it’s not solely due to the fact that major players like BlackRock are introducing tokenized money market funds or that Circle’s USDC is becoming the standard payment method for on-chain Treasury bonds.
The fundamental reason is that theory is finally converging with reality: tangible businesses, genuine cash flows, and actual compliance are becoming commonplace.
However, despite this increasing positive momentum, a significant obstacle continues to threaten the industry’s progress: the relentless pursuit of an ideal regulatory structure.
Advancement Requires Incremental Steps, Not Flawless Solutions
The future of finance is undeniably digital. Ultimately, every asset category, ranging from bonds to real estate, will exist in a tokenized format. When this happens, tokenization must offer benefits extending beyond a simple digital representation. Digitalization should translate into faster, less expensive, and more accessible markets.
But none of these benefits are relevant if institutions cannot allocate capital on a large scale. Institutions are, and always will be, wary of ambiguity. The problem isn’t that governing bodies haven’t taken action, but rather that the present approach prioritizes comprehensive theory over practical implementation.
Comprehensive frameworks, seamless international regulations, and universal harmonization might seem ideal in principle. However, in reality, they’ve caused stagnation. While some reference a “global regime” in traditional finance (TradFi), its veracity is questionable. The Basel III framework in Europe, for instance, is distinct from banking regulations in the United States. The fragmentation isn’t unique to cryptocurrency. Generally speaking, global finance operates in a segmented manner. Awaiting an elusive, all-encompassing solution will only hinder development.
This fragmentation is evident in significant markets. In the U.S., tokenized equities are unequivocally classified as securities. MiCA offers a much-needed overarching blueprint in Europe, but its limitations are already becoming apparent, especially in fields like DeFi. Singapore permits tokenized bonds for institutional investors while prohibiting public retail involvement.
These instances are not regulatory failures. Instead, they demonstrate that regulation evolves. The core challenge isn’t regulatory uncertainty, but the lack of market infrastructure and robust demand, resulting in rails being in place but ultimately underutilized. Markets can function with imperfect regulations; they struggle when all participants remain hesitant on the sidelines.
The Detrimental Effects of Delay
Institutional hesitation isn’t based on a dislike of blockchain technology, but rather on the reluctance to explain to a board or regulatory authority why they invested in assets that might subsequently be determined to violate existing laws.
The costs for banks to transition include dismantling and rebuilding, making it challenging to justify the substantial restructuring for what they currently perceive as a niche market. In some locations, investments of capital and services can be made with confidence, while in others, even minor licensing gaps force players to remain inactive.
Uncertainty not only slows down adoption but also increases the cost of legal consultations, obligates businesses to segregate entire business units, and weakens cross-border liquidity. Each jurisdiction becomes a legal minefield. This is more than a technical issue; it’s a deeply ingrained, systemic issue related to regulatory clarity.
Clarity, Even Imperfect Clarity, Unleashes Capital
The truth is, the crypto industry doesn’t require perfectly harmonized global regulation to prosper. Traditional capital markets have functioned for decades under structures that are far from uniform. The key requirement is a foundational level of clarity and consistency, sufficient for businesses to evaluate and price risk. Consider shadow banking, a $60 trillion system that coexists with, rather than outside of, formal regulation. While complex and imperfect, it operates.
This isn’t a call for deregulation. It’s about discerning between essential protections and unattainable ideals. While fraud prevention and investor protection are crucial, they don’t necessitate a flawless global framework.
For regulators, the optimal approach is to prioritize incremental clarity and enact regulations even if they’re subject to change. Progress now outweighs perfection later. For financial institutions, the primary risk is falling behind. Tokenization will advance regardless of perfect clarity, and proactive players are already developing solutions in jurisdictions that offer workable guidance. For crypto builders, the challenge is to abandon the expectation of external validation and operate within the existing legal frameworks, while concurrently advocating for gradual enhancements.
Tokenization Addresses Real Problems—If Enabled
The value of tokenization extends beyond novelty for crypto enthusiasts; it’s about resolving real-world challenges such as settlement times measured in days rather than seconds, capital locked in reconciliations, and asset classes confined within jurisdictional borders.
Stablecoins have provided the initial roadmap. When regulators provide clarity, regardless of its imperfection, adoption soars. Tokenized securities can follow suit—but only if we move away from the binary view of regulation as either “perfect” or “broken.” Some may view this as accepting mediocrity, but iterative progress is the natural path to maturing financial systems.
From Theoretical to Practical
Cryptocurrency has transcended speculative memes. We’re now seeing profitable businesses moving tangible funds on-chain. If there ever was a time to embrace iterative progress, it’s now. The companies that are willing to operate within a clear, albeit evolving, regulatory context will define the next era of finance.
Advancement equals momentum, not perfection. Forcing the industry to idly await comprehensive frameworks will keep the digital asset revolution trapped in a frustratingly theoretical state.
Viewpoint by: Kevin de Patoul, Founder and CEO of Keyrock.
This article serves as a source of general information and should not be construed as legal or investment guidance. The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.