The Tokenization Boom Can’t Scale Without Cross-Chain Coordination

Gone are the days when tokenization was a niche concept. It’s now a capital markets reality measured in billions, and the question has shifted from adoption to architecture. Can the industry coordinate fast enough to turn a rush of isolated pilots into a single, compounding market? Today, the answer is no, the coordination gap continues to drain value through duplicated integrations, stranded liquidity and regulatory drag.

The inefficiencies tokenization promised to fix

A decade of experimentation left a maze of base layers (L1s), layer-2s and token standards that often cannot speak the same language. An equity token minted on one chain rarely settles natively against collateral on another. Liquidity splinters, market makers must maintain multiple inventories, and the same asset is wrapped three different ways. This functions like walled courtyards, far from a unified market.

Tokenization promised faster settlement and broader access. Instead, firms are building parallel silos that import back-office frictions into a new substrate. Regulators see the duplication and hesitate. Investors face basis risk across wrappers. Issuers pay twice for audits and integration. Growth continues, but at a discount to what the technology could deliver.

The architecture of a unified market

There is no question that assets have to work across chains. Interoperability belongs in the design from day one. Encouragingly, both incumbent rails and emerging protocols are experimenting with exactly this mandate. SWIFT, for example, has shown that its messaging network can coordinate transfers of tokenized value across multiple public and private chains, reducing one of the biggest frictions to institutional scale. Regulators are more likely to bless systems that reuse the controls they already know.

At the infrastructure level, new interoperability protocols are tackling the same challenge with different architectures. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) provides secure cross-chain messaging and programmable token transfers, allowing liquidity and compliance logic to move seamlessly across networks. Wormhole enables verifiable actions through a decentralized guardian network that validates cross-chain messages, while LayerZero connects applications across chains through an omnichain messaging framework built on lightweight nodes and configurable trust models. Each approach addresses the same problem: making tokenized value portable and composable without sacrificing security or regulatory confidence.

Let demand determine where liquidity pools, independent of initial consortium deployments. Cross-chain liquidity pools and smart order routing can direct flow to the best venue while maintaining a unified positions record for risk. The market should set measurable targets: cross-chain fill rates above 99 percent, sub-minute finality between domains, and reconciliation without manual breaks.

Second, standardize both the asset and the identity. A uniform, open token standard for regulated assets should include only the essentials—transfer controls, role-based permissions and lawful enforcement hooks, while remaining compatible with the most common blockchain formats, known as ERC-20, ERC-721, and ERC-1155. Emerging frameworks such as ERC-3643 and ERC-7943 are early efforts to codify compliance and interoperability for real-world assets, but they must remain modular, neutral, and open to extension so issuers can evolve without breaking composability.

Pair standardized assets with portable identity. Verifiable credentials and on-chain attestations should travel with the investor, ensuring that KYC and eligibility checks do not restart at every venue. This is the foundation of scalable compliance: identity and permissioning that move with the holder, not the platform.

Finally, synchronize regulation inside the asset itself. Regulators expect familiar outcomes—eligibility checks, sanctions screening, audit trails—but with improved transparency and observability. The EU’s DLT Pilot Regime demonstrates how harmonized infrastructure can evolve within existing securities law, enabling innovation under MiFID II supervision while preserving market integrity.

Bake these controls directly into the token. Rule sets can define who may hold or transfer an instrument, under which jurisdictions, and when forced transfers are lawful. That approach shortens compliance cycles and leverages shared messaging standards with minimal token primitives that any venue can implement. Singapore’s Project Guardian reflects this vision, with banks and asset managers testing regulated tokenization on open infrastructure under supervisory oversight.

Where the power plays are now

The rise of tokenized cash equivalents shows the appetite: assets in tokenized Treasury products have surged as institutions seek intraday settlement and programmatic collateral. Institutional players are no longer debating if tokenization happens; they are competing over where it settles and how it moves. Custodians want to be the universal safekeeping layer. Market infrastructures want to be the neutral hub for cross-chain messaging. Asset managers want to turn tokenized funds into the default cash leg for crypto-native activity. Each move is rational; only coordination scales them.

Consider the signal from mainstream finance. Citi estimates tokenized digital securities could reach four to five trillion dollars by 2030. Boston Consulting Group projects that as much as 18.9 trillion dollars of illiquid assets could be tokenized by 2033. Treat these numbers as a map of where capital intends to go if the rails align. Projects that keep assets stuck on single chains will miss those flows. The regulatory posture is shifting in the same direction. Central banks and industry groups are testing how to move tokenized value across networks using existing messaging standards. These are coordination bets that matter more than headline grabs. They reward open designs that keep compliance portable.

The scoreboard that matters: portability and trust

The next phase of tokenization is a race to make assets both portable and trusted across chains. Portability lowers the cost of capital by exposing issuances to broader liquidity and deeper collateral markets. Trust reduces legal friction, accelerates launches and opens institutional balance sheets to programmable finance. Together, they create network effects that a single-chain strategy cannot replicate, expressed in tighter spreads, lower collateral haircuts and faster listings.

A critical enabler of this evolution is the emergence of atomic settlement, allowing cross-chain transactions to execute in full or not at all. Early implementations of atomic swaps already demonstrate how synchronized settlement can eliminate counterparty risk and reduce dependence on intermediaries for finality. As interoperability frameworks like Chainlink CCIP, Wormhole and LayerZero mature, they will bring these mechanisms into regulated environments, turning fragmented liquidity into a unified market fabric where assets and collateral move seamlessly across ecosystems without breaking compliance or auditability.

For decision-makers, the path forward requires prioritizing infrastructure over isolated issuance. The focus must shift toward interoperable rails, open token standards and portable identity frameworks built on verifiable credentials. Success will be measured by new targets: cross-chain settlement rates, shared liquidity depth, atomic swap efficiency and reduced time-to-compliance.

Tokenization is crossing from curiosity to critical infrastructure. The market already punishes fragmentation, thin liquidity, duplicated cost and preventable risk, even as architectures mature. The institutions that align early around interoperability, standardized assets and portable identity will own the compounding benefits of a unified market, while others remain confined to isolated silos.

Coordination is not an afterthought; it is the multiplier that turns pilots into markets. Whether the coming trillions in tokenized value flow through harmonized rails or fracture across closed venues will define the next decade of capital markets. Those who architect for coordination will capture the scale; those who do not will fund it for others.