Opinion by: Kevin de Patoul, co-founder and CEO of Keyrock
Crypto is experiencing a familiar sense of déjà vu. Real-world assets (RWAs), tokenized funds, and onchain treasuries are buzzwords that have been in circulation for years. In 2022, as hype eclipsed genuine adoption, a BCG report estimated that the total value of tokenized assets could soar to $16 trillion by 2030, with the current market cap at $50 billion in 2025.
This time, it feels distinctly different, not solely due to major players like BlackRock introducing tokenized money market funds or Circle’s USDC emerging as the primary settlement layer for Treasury bonds onchain.
The narrative now aligns with reality: there are real businesses, tangible cash flows, and actual compliance.
Nevertheless, despite this momentum, one factor continues to hinder the industry: the quest for an idealized regulatory framework.
Progress requires iteration, not perfection
The future of finance is undeniably digital. Every asset class, from bonds to real estate, will ultimately exist in a tokenized format, which must provide more than just a digital replica. Digitization will facilitate faster, cheaper, and more accessible markets.
However, none of this holds weight if institutions cannot allocate capital effectively. Institutions are inherently averse to uncertainty. The issue isn’t the inaction of regulators but the current strategy that prioritizes theoretical completeness over practical clarity.
Related: Discrepancies in stablecoin laws benefit larger players
While universal frameworks, smooth cross-border regulations, and global harmonization look appealing on paper, they have resulted in stagnation in practice. Discussions often cite TradFi’s “global regime,” yet the reality is less clear-cut. Basel III in Europe diverges from US banking regulations. The crypto space isn’t uniquely fragmented; global finance itself is siloed. Anticipating a rare, one-size-fits-all solution will only stall progress.
The implications of this fragmentation appear starkly across major markets. In the US, tokenized equities are explicitly categorized as securities. MiCA presents a welcome comprehensive playbook in Europe, but its limitations are evident, particularly in the DeFi arena. Singapore permits tokenized bonds for institutional investors but excludes open retail participation.
These instances shouldn’t be viewed as regulatory failures. They illustrate that regulation is a dynamic process. The true challenge isn’t regulatory uncertainty but the lack of market infrastructure and substantial demand, where mechanisms are present yet underutilized. Markets can function with imperfect regulations, but they cannot thrive if stakeholders remain on the sidelines.
The cost of waiting
Institutions don’t hesitate due to a dislike of blockchain. Their reluctance stems from the fear of explaining to their boards or regulators why they might have supported assets potentially deemed retroactively non-compliant with existing laws.
The costs for banks associated with transitioning involve dismantling and rebuilding structures, making it challenging to rationalize such changes for what they still view as a niche market. In certain regions, capital commitments and services can be pursued confidently. In others, even minor licensing discrepancies compel players to remain inactive.
Uncertainty not only hinders adoption but also inflates the costs of legal consultations, necessitates firms to compartmentalize entire business units, and cripples cross-border liquidity. Each jurisdiction becomes a legal quagmire. This encompasses more than just a technology issue; it reflects a deep-seated systemic challenge regarding regulatory clarity.
Clarity unlocks capital, even if it’s messy
The reality is that crypto doesn’t require flawless global regulation to prosper. Traditional capital markets have functioned under frameworks that are far from uniform for decades. What’s crucial is a fundamental level of clarity and consistency to allow firms to evaluate and price risk effectively. Consider shadow banking: a $60 trillion ecosystem that operates in conjunction with, not outside of, formal regulation. It’s intricate and imperfect, yet it functions.
This discussion isn’t about deregulation. It’s about discerning between essential safeguards and unattainable ideals. While fraud prevention and investor protection are vital, they don’t necessitate an impeccable global framework.
For regulators, the forward path entails emphasizing iterative clarity and publishing rules even if they must evolve. Progress made today trumps the pursuit of perfection tomorrow. For financial institutions, the greatest risk lies in lagging behind. Tokenization won’t wait for absolute certainty, and agile players are already constructing frameworks in jurisdictions with practical guidelines. For crypto innovators, the challenge is to move beyond waiting for external validation and operate within the current legal frameworks, while simultaneously advocating for gradual enhancements.
Tokenization solves real problems — if we let it
The significance of tokenization extends beyond being a fad for crypto enthusiasts. It addresses real challenges — long settlement times, capital locked in reconciliations, and asset classes restricted by jurisdictional barriers.
Stablecoins provide a viable model. When regulators clarify, even imperfectly, adoption surges. Tokenized securities can similarly flourish — but only if we stop viewing regulation as a binary decision between “perfect” and “broken.” Critics may see this as settling for mediocrity, yet iterative progress is essential for the evolution of financial systems.
From theory to reality
The crypto landscape has advanced beyond speculative memes. We are engaging with profitable businesses that are transacting real funds onchain. If there was ever a moment to champion iterative progress, it is now. The entities ready to navigate within a clear, albeit changing, regulatory environment will shape the future of finance.
Progress equates to momentum, not perfection. If the sector is compelled to linger in limbo awaiting comprehensive frameworks, the digital asset revolution will remain frustratingly abstract.
Opinion by: Kevin de Patoul, co-founder and CEO of Keyrock.
This article aims to provide general information and should not be construed as legal or investment advice. The views expressed here represent the author’s and do not necessarily reflect those of Cointelegraph.
