As Wall Street increasingly flirts with blockchain rails, tokenization of real-world assets (RWAs) has turned out to be the dominant crypto narrative.
In simple words, tokenization is the process of using blockchain technology to digitally represent assets like stocks, bonds, Treasury bills, etc., to offer fractional ownership to prospective investors.
The excitement around tokenization has led prominent leaders like the U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins to make bullish predictions and suggest that the entire financial system will move on-chain within just a few years.
But Maple Finance co-founder and CEO Sidney Powell thinks such expectations are overblown.
Speaking with TheStreet Roundtable host Scott Melker, Powell pushed back on recent claims that tokenization will happen almost overnight.
“I see takes like ‘everything’s going to be on-chain in two years,'” Powell said.
“And I think of it like an S-curve, where it’s actually slower than you expect at the start. But then probably after 5-6 years, we’ll have way more on-chain than we expect, and then it kind of peters out again.”
As per Powell, tokenization will follow an S-curve where it will take longer than expected in the early years, then expand faster than most people anticipate, before eventually leveling off as tokenization becomes standard financial infrastructure.
2-year deadline unrealistic
While Powell agrees that tokenization is inevitable, he emphasized that technology adoption tends to unfold over decades, not a few years.
“Two years seems early,” he said. On the other hand, a target of 5 or 10 years is more understandable, he added.
The internet was still growing at a ripping pace in the mid-1990s, and crypto is still going to be growing at a phenomenal pace 15-20 years from now, he remarked.
As per Powell, tokenization may feel like it’s suddenly everywhere, but the underlying shift in financial plumbing will take far longer than a few years.
DTCC-Canton partnership puts tokenization in spotlight
The renewed urgency around tokenization comes as major financial infrastructure players make concrete moves.
The duo also discussed how the Depository Trust & Clearing Corporation (DTCC), which settles trillions of dollars in securities transactions, recently announced its plans to tokenize the Depository Trust Co. (DTC)-custodied U.S. Treasury securities. The DTC is a subsidiary of the DTCC.
