Financial institutions are rolling out a growing slate of tokenized real‑world asset (RWA) products, yet adoption remains modest. Franklin Templeton’s Chetan Karkhanis recently outlined the market’s evolution, pointing to a set of structural roadblocks that keep blockchain‑based investments from entering mainstream portfolios.

A primary obstacle is the lack of unified technical and legal standards across jurisdictions. Issuers, custodians, and trading venues each operate on proprietary frameworks, making it difficult for investors to verify ownership, assess risk, or move assets between platforms. Regulatory guidance is still evolving, leaving many participants uncertain about compliance requirements for tokenized securities, commodities, and real estate.

Investor hesitation compounds the problem. Secondary‑market liquidity for tokenized assets is thin, and price discovery mechanisms are immature compared with traditional exchanges. Without deep order books or reliable valuation tools, portfolio managers struggle to justify allocation, especially when due‑diligence processes must accommodate novel smart‑contract risk and custody arrangements.

Potential catalysts are emerging. Industry groups are pushing for interoperable token standards and shared KYC/AML protocols, while regulators in several major economies have signaled forthcoming clarity on digital‑asset classification. Platforms such as Hyperliquid are experimenting with unified settlement layers that could bridge fragmented venues, offering a glimpse of the infrastructure needed for broader uptake.

If standardization and regulatory certainty converge, tokenized RWAs could transition from niche experiments to routine portfolio components. Until then, the market’s growth will likely remain constrained by the very fragmentation that sparked the initial hype.