If the core of "Wealth Management 2.0" is ETFs, then will the core of "Wealth Management 3.0" be tokenization?
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If the core of "Wealth Management 2.0" is ETFs, then will the core of "Wealth Management 3.0" be tokenization?
Hedge funds such as BlackRock and Janus Henderson have begun experimenting with "tokenization."
Navigating Web3 tides with focused insightsBy Li Xiaoyin, Wall Street Insights
Thanks to its transparency and flexibility, ETFs are widely seen as "version 2.0" of the asset management industry. Now, tokens compatible with decentralized platforms could push asset management into a "3.0" era.
A recent opinion piece published in Sherwood News suggests that cryptocurrency and traditional finance will eventually converge. Analysts predict this convergence could unlock a tokenized securities market worth trillions of dollars.
So what exactly does the future of financial asset "tokenization" look like?
The article explains that all assets—including stocks, bonds, and commodities—could be transformed into tokens (digital assets representing value or ownership on decentralized systems). These tokens would be tracked on a unified digital ledger and managed through automated back-end processes, operating around the clock with real-time transaction settlement.
Will Peck, Head of Digital Assets at WisdomTree—a financial innovation firm that has launched over ten tokenized investment funds—says tokenization enables anyone to “access capital and confirm transactions precisely when you need them.”
“Just imagine what it would be like if investing were more tightly integrated with payments,” he said. “Or how appealing it might be to transfer assets and value more seamlessly.”
From WisdomTree’s perspective, user entry barriers and operational complexity for trading tokenized securities are nearly zero: after registering on the WisdomTree app, users can directly trade tokenized funds using a debit card.
The Future of Tokenized Asset Management: Mixed Outlook?
In reality, prominent hedge funds such as BlackRock and Janus Henderson have already begun experimenting with tokenization, partnering with crypto platforms to launch tokenized U.S. Treasury funds. However, the industry as a whole remains in its very early stages.
Currently, the outlook for tokenized asset management is mixed.
Lucas Vogelsang, co-founder of tokenization platform Centrifuge, says asset tokenization could make financial products accessible to a broader base of retail investors, helping promote fairness within the financial system:
“Think about IPOs, private credit, hedge funds… maybe this could make the financial system a bit fairer.”
Klaas Knot, Chair of the Financial Stability Board, also believes asset tokenization will improve transaction efficiency and open new market access for investors. But he warns that “it may also amplify many of the same vulnerabilities present in traditional finance.”
A Deloitte study notes that tokenization could bring greater accessibility, faster settlements, improved transparency, and lower operational costs. However, it may also accelerate financial crises, speed up the spread of financial fraud, and reduce the time window available for monetary policy decisions.
One current challenge for tokenized asset management is this: tokens trade 24/7, yet their underlying assets are tied to traditional financial operations, meaning investors still must wait at least until T+1 for settlement.
Additionally, some figures in the cryptocurrency space remain skeptical of tokenization.
Meltem Demirors, founder of Crucible Investments, argues that tokenizing bad assets doesn’t make them better—for example, tokenizing real estate doesn’t necessarily increase its liquidity or attractiveness.
Demirors also contends that, fundamentally, tokenization brings no real innovation to the crypto industry:
“Taking $50 billion worth of Bitcoin out of circulation and handing it to a financial institution that charges 20 to 250 basis points to hold it for you—that’s not crypto innovation. That’s asset management innovation.”
WisdomTree’s Peck agrees that financial firms aren’t embracing tokenization to promote cryptocurrency per se, but rather to explore new methods and channels for asset management:
“I still believe tokenization is the future of asset management—I just think the path to get there may differ from our original expectations.”
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