Wall Street is abuzz about ‘tokenized assets’—but most activity is limited to a nascent ‘wrapper’ phase, report finds

Finance leaders from Black Rock’s Larry Fink to Robinhood’s Vlad Tenev have displayed enthusiasm for tokenization, a term for representing real-world assets as tokens on the blockchain. But despite the excitement, roughly 78% of tokenized assets remain only as “wrappers,” or receipts for assets that primarily operate off-chain, according to a new report from crypto asset manager Pantera. The report scored 542 tokenized assets on a scale from wrapper, where a token represents a claim on an offchain asset held by a custodian, to native, where issuance, redemption, and custody all happen fully onchain. The study found 77.6% of assets fell into the category of wrapper. The data offers a reality check for the tokenization space, where major financial institutions including BlackRock, Franklin Templeton, and JPMorgan have made plays. Despite the encouraging uptake, most tokenization projects are creating blockchain representations of traditional assets such as Treasury bills, but failing to capture the full potential benefits of on-chain technology. “For many institutions, [wrappers] are a practical first step because they fit familiar compliance and operating models while improving distribution and access,” the report’s authors Franklin Bi, Ally Zach, and Danning Sui wrote. “But they do not fully unlock what makes blockchains distinct. The biggest gains come when assets become more natively on-chain and can move, settle, and integrate more fluidly across the system.” The report likened the current state of tokenization to the early 2000s era when media companies sought to harness the Internet to extend their reach, but failed to capture the full potential of the web, resulting in them simply posting PDFs online that lacked links, search or other common web features. “Tokenization is in its newspaper-on-a-website phase. The $321 billion market has proven that assets can be distributed on-chain. It has not yet produced the native financial instruments that will define what