The primary constraint on real-world assets (RWAs) has been regulatory engagement rather than technology, and that dynamic is evolving in the US, according to Ashley Ebersole, chief legal officer of Sologenic.
Ebersole joined the Securities and Exchange Commission (SEC) in early 2015, where he was part of the agency’s early working groups on crypto and the application of securities law to blockchain-based assets.
In 2017, the securities regulator published the DAO Report, asserting its authority over tokens classified as securities. This resulted in an enforcement-focused approach that left limited opportunities for ongoing dialogue with the industry.
“Following the DAO Report, it was an enforcement response for the next two years. I anticipated a shift towards policy during my tenure — that didn’t occur,” he told Cointelegraph.
Ebersole noted that this stance intensified after his departure from the agency, just before Gary Gensler took over in April 2021. He continued engaging with the SEC from private practice until the agency staff were discouraged from interacting with crypto firms.
This breakdown in communication complicated efforts for companies to create compliant RWA products and delayed the rollout of onchain securities models that are now entering production.
How compliant RWAs can work in practice
The market for tokenized real-world assets is growing rapidly. Standard Chartered has estimated that the value of non-stablecoin RWAs could reach $2 trillion by 2028, largely driven by tokenized equities, funds, and other traditional financial instruments moving onto blockchains.
Major financial institutions are gearing up for that transition. BlackRock is reportedly investigating tokenization to enhance fund infrastructure, while JPMorgan has introduced tokenized money-market products on Ethereum.
“There is a proper method to do compliant tokenization and issue tokenized assets. It is absolutely feasible,” Ebersole stated.
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One model he referenced involves stock tokens that operate similarly to depository receipts. When a user buys a token, a corresponding share is obtained and held by a regulated clearing broker, while a token is minted to symbolize contractual rights to that share.
“You own it. It’s minted at the time of purchase, referencing contractual rights to a share of stock acquired simultaneously,” Ebersole explained.
“And you receive the dividends and the voting rights and everything else that accompanies being a shareholder, because you are.”
Ebersole emphasized that this approach differs from other tokenized stock products that only provide price exposure without conferring ownership. In those cases, stock tokens act as synthetic instruments tracking the price of an equity without granting shareholder rights or a legal claim to the underlying asset.
The distinction remains pertinent today. In late July, Robinhood promoted tokenized exposure linked to OpenAI. The private firm soon distanced itself from the product and stated that any transfer of its equity requires approval, which was not granted.
Where RWA tokenization breaks down
Interest in tokenized RWAs is rising, but Ebersole cautioned that it does not eliminate the geographical constraints of securities regulation. In practice, many RWA initiatives face legal and jurisdictional hurdles.
Securities laws remain nationally bound even when blockchain infrastructure is not. An RWA framework that complies with US standards does not automatically apply to European Union or Asian markets, which have their own licensing, disclosure, and distribution regulations.
“The most challenging aspect we hear regarding tokenized RWA projects is the complex web of legal requirements that must be followed if you want to operate fully compliantly,” Ebersole stated. “This is true in the US, and it becomes even more intricate globally.”
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That fragmentation has led many platforms to shift toward region-specific offerings. Robinhood’s tokenization service is limited to EU users. It enables trading in tokenized US stocks and exchange-traded products but does not grant direct ownership of the underlying shares. Instead, the tokens reflect the prices of publicly traded securities and are regulated as blockchain-based derivatives under the bloc’s Markets in Financial Instruments Directive II (MiFID II).
Yield is another domain where RWA tokenization frequently encounters regulatory obstacles. Ebersole emphasized that regulators maintain a clear distinction between yield generated through a holder’s actions — such as participating in transaction validation — and yield that accrues passively by merely holding a token.
“If you acquire an asset with an inherent yield simply by holding it, regulators will still consider that to be a clear indicator of a security,” he stated.
This distinction has influenced enforcement actions and continues to shape how tokenized products are developed. While regulatory perspectives on staking and other yield-generating methods have evolved under the current SEC leadership, Ebersole noted that inherent yield remains a sensitive issue under current legislation.
The regulatory shift behind RWA momentum
The practical evolution for RWAs has emerged from a shift in the SEC’s approach toward the industry. During a period dominated by enforcement under the Gensler-led SEC, when staff were dissuaded from engaging with crypto firms, potential issuers were left without a viable path to create compliant onchain products, even while trying to operate within existing securities law.
This stance has started to ease as the agency expresses a greater willingness to engage. Ebersole noted recent leadership changes at the SEC, including the addition of Paul Atkins, as factors contributing to a newfound approach that views blockchain technology as infrastructure with possible applications in securities markets rather than as an inherent regulatory threat.
“Now the SEC is much more open to industry interaction, saying, ‘Come in and share how you are trying to align with our objectives,’” Ebersole remarked.
In this environment, compliant models like tokenized equities structured through regulated intermediaries and custody arrangements can transition from concept to production, despite ongoing legal challenges related to cross-border distribution and yield-bearing designs that might still incur additional securities obligations.
Current securities law continues to govern RWAs, but the shift away from an enforcement-only approach does not, in Ebersole’s opinion, preclude the possibility of more tailored regulations over time if regulators and the market continue to address lingering gaps.
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