tokenizing – Earlybirds Invest

Focus shifting beyond stablecoins

Geoffrey Kendrick, head of digital assets research at Standard Chartered, explained that the industry’s heavy reliance on stablecoins has overshadowed other tokenization prospects that could transform illiquid and hard-to-access markets.

Kendrick wrote:

“Non-stablecoin RWA tokenization has lagged for a number of reasons — regulatory uncertainty and focus on wrong areas being amongst them. However, as regulatory clarity emerges and if tokenizers focus on the right areas, then growth will come.”

The report singled out tokenized private credit as a notable early success, citing it as proof that blockchain can unlock real value by improving liquidity for assets traditionally considered difficult to trade.

It argued that the same logic can extend to private equity and niche commodities markets, where institutional investors are actively seeking better efficiency and transparency.

Regulatory patchwork persists

Despite the optimism, Standard Chartered cautioned that regulatory fragmentation remains an obstacle. Jurisdictions such as Singapore, Switzerland, the EU, and Jersey have developed clearer rules for RWAs, but others lag, while know-your-customer (KYC) checks continue to complicate cross-border adoption.

The bank’s research called for tokenization strategies that emphasize “areas of differentiation from off-chain assets” rather than replicating what already works well in traditional markets. By doing so, platforms and issuers could gain traction even in uncertain regulatory environments.

The report highlighted that tokenized private credit, structured debt, and corporate bonds have begun to expand steadily, with projections showing an accelerated climb starting from 2025.

It further suggested that if industry players leverage lessons from private credit and build robust compliance frameworks, non-stablecoin RWAs could emerge as the next major wave in the digital asset sector.

Mentioned in this article

Ondo Finance and legal counsel from Davis Polk & Wardwell met with the US Securities and Exchange Commission’s Crypto Task Force on April 24 to discuss regulatory pathways for tokenized versions of publicly traded US securities, according to a memorandum reviewed by the agency’s staff.

The meetings focused on structuring options and regulatory considerations for issuing tokenized securities, particularly those referencing assets such as US equities and fixed-income instruments.

The topics listed revealed that Ondo’s presentation addressed regulatory challenges, including registration requirements, broker-dealer obligations, market structure rules, financial crimes compliance, and the application of state corporate laws.

The firm proposed a discussion on structuring approaches that would allow for the compliant issuance and distribution of tokenized securities while exploring possibilities for participating in a regulatory sandbox or targeted relief.

Additionally, Ondo’s legal team outlined key considerations around investor protection, anti-money laundering compliance, and the application of the Exchange Act to token-based issuance models.

Expanding institutional-grade tokenization

The initiative marks another step in Ondo’s broader push to integrate traditional financial assets into blockchain-native environments. The firm currently manages over $1 billion in tokenized products, representing 16.4% of the $6.15 billion tokenized US Treasuries market.

The Ondo Short-Term US Government Bond Fund (OUSG) is a blockchain-based fund that tokenizes exposure to short-term US Treasuries. Its primary backing is the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), and the fund aims to deliver yield while maintaining liquidity at all times.

Meanwhile, a combination of short-term Treasuries and demand deposits held with banks secures Ondo’s US Dollar Yield Token (USDY).

Designed to mimic the accessibility of stablecoins, USDY targets non-US investors seeking exposure to US dollar-denominated returns without using traditional financial intermediaries.

Both products represent a growing asset class within tokenized finance, consisting of applying blockchain infrastructure to wrap and manage real-world securities in a digitally native format.

SEC engagement

The meeting represents part of a broader industry effort to seek clarity on regulatory guidelines since SEC leadership changed in January.

Since creating its Crypto Task Force on Jan. 21, the regulator has held 81 meetings with key figures from the crypto industry. The meetings involved discussions around a wide range of subjects, including implementing staking in exchange-traded products (ETPs) and the impact of market manipulation on centralized platforms.

These movements highlight how the regulator is now open to engaging with the crypto industry under the President Donald Trump administration.

Focus shifting beyond stablecoins

Regulatory patchwork persists

Mentioned in this article

Latest Alpha Market Report

Expanding institutional-grade tokenization

SEC engagement

Mentioned in this article